Led by Vihiga Senator Godfrey Osotsi, the Senate Committee on County Public Investments and Special funds convened today to deliberate over concerns raised by the auditor general regarding three water companies in Nakuru County: Naivasha Water and Sanitation Company Limited (NAIVASCO), Nakuru Water and Sanitation Company Limited (NAWASCO) and Nakuru Rural Water and Sanitation Limited Company (NARUWASCO). The focus was on the financial operations of these entities for the fiscal year 2020/2021.

Governor Susan Kihika of Nakuru County, previously fined KES 500,000 for snubbing two invitations to attend the committee sessions, appeared before the Senate Committee today. She was given the opportunity to offer her defence. On her behalf, the governor explained her absence by citing ill health and being abroad for medical treatment during the time of the summons. Her explanation was met with approval from the committee, leading to the lifting of her summons and waiver of the fines.

With respect to NAIVASCO, the committee underscored a slightly inflated Non-Revenue Water (NRW) figure for the reviewed fiscal year - 28%, a deviation of 3% from the recommended 25%. The committee accordingly directed the governor to implement measures to curtail the NRW, tackling physical and commercial losses, and to submit a detailed report within 60 days. The Office of the Auditor General (OAG) will later verify these measures and assess their efficacy in the subsequent audit cycle.

Issues of concern also included the company's substantial long-standing receivables. The governor was directed to present the OAG with a schedule of company debtors and a comprehensive debt collection strategy within 30 days. The committee further recommended the provision for these long-term receivables.

The committee also scrutinised unsupported borrowings and capital grants, instructing the managing director to provide necessary documents with detailed information regarding these elements. A further emphasis was placed on capital grants, which need to be well-documented to mitigate risks of double financing for the same project.

For NARUWASCO, undisclosed loans from the African Development Bank (ADB) were a key concern. The committee acknowledged the loan agreement between the national government and Central Rift Valley Water Works Development Agency (CRWWDA) and recommended that the water company recognise the loan on their financial statements, with due consideration to the agency implications on repayments to CRWWDA.

The governor was also asked to submit a comprehensive payments plan, inclusive of customer agreements and supporting payment schedules, within a fortnight regarding trade and other receivables.

Noting management challenges within NARUWASCO, the committee implored the governor to scrutinise the company's operations closely. They recommended swift action on performance contracting for all staff members to bolster productivity. The Managing Director of the company was also instructed to produce supporting documents for the renewal of his appointment within 14 days. Furthermore, the committee directed a total restructuring of the Board of Directors within 60 days, urging its reconstitution in line with the law.

In summarising their directive for the three companies, the committee urged updates to service providers on loan repayments and evidence provision to the committee. Segmentation of receivables and ageing analysis were suggested for better financial management. The committee also emphasised the need for treasury confirmation on the repayment of the ADB loan by the three companies. It was reiterated that all necessary documents should be provided to auditors in accordance with the Public Audit Act and Public Financial Management Act.

Joining Senator Osotsi at the meeting were other committee members including Vice Chair Prof. Tom Ojienda, and Senators Eddy Oketch, Hamida Kibwana, William Kisang, Karungo Thangwa and Miraj Abdillahi.