Nairobi County and Kenya Power Clash Over KSh 3 Billion Pending Bill

The ongoing financial dispute between Nairobi City County and Kenya Power has escalated, with both entities locking horns over outstanding payments. This latest standoff highlights the broader issue of mounting pending bills in county governments, a problem that continues to threaten fiscal discipline and service delivery across the country.

The Standoff: Power Cuts, Clamped Vehicles, and Garbage Dumps

On Monday, tensions reached a boiling point when Nairobi City County took drastic measures against Kenya Power by clamping its vehicles and dumping garbage outside Stima Plaza. This came as retaliation after the power utility company disconnected electricity in several county offices due to unpaid bills.

In response, the county government further escalated its protest by cutting off water and sewerage services to Kenya Power’s headquarters. These aggressive moves underscore the deep financial rift between the two entities, with neither party willing to back down.

The Root of the Conflict: Who Owes Who?

At the heart of the dispute is a massive KSh 3 billion electricity bill that Nairobi County owes Kenya Power. This debt forms the bulk of the KSh 4.4 billion owed by devolved units to the utility firm.

However, Nairobi City County is countering this claim, insisting that Kenya Power owes it KSh 4.83 billion in wayleave fees for using public land for its power infrastructure. The county argues that it is entitled to these fees, making it a two-way dispute rather than a one-sided debt crisis.

Kenya Power, on the other hand, refutes these claims. The utility company points to legal provisions stating that public bodies cannot impose wayleave charges or other levies on public energy infrastructure without approval from the Cabinet Secretary. In a statement released on Monday, Kenya Power noted that Nairobi County’s electricity debt had ballooned by KSh 1.3 billion in the past two years, worsening the financial strain on the company.

The Larger Problem: Kenya’s Pending Bills Crisis

This standoff between Nairobi County and Kenya Power is just a symptom of a much larger issue—Kenya’s growing pending bills crisis. As of June 30, 2024, county governments had accumulated unpaid bills amounting to KSh 181.98 billion, marking an increase of KSh 17.22 billion from the previous year.

Pending bills pose a serious risk to fiscal discipline and economic stability, particularly for suppliers and service providers who rely on timely payments to sustain their businesses. Many firms that supply goods and services to the counties continue to struggle due to delayed payments, leading to cash flow problems, job losses, and business closures.

The Pension Crisis: Another Unsettled Bill

Beyond supplier debts, counties are also grappling with massive pension liabilities. As of October 31, 2024, pension-related pending bills owed to three major pension schemes stood at a staggering KSh 91 billion. This reflects a sharp increase from KSh 73.4 billion the previous year, putting county governments at risk of failing to meet their financial obligations to retirees.

The growing pension debt not only affects retired civil servants but also increases the financial burden on county administrations, making it harder to allocate funds for development projects and essential services.

Government Efforts to Address the Pending Bills Crisis

The national government, through the Senate and the Treasury, has taken steps to address the worsening pending bills situation.

• Transition to Accrual-Based Accounting: The Treasury has initiated a shift from cash-based to accrual-based accounting. This move is expected to gradually reduce the stock of pending bills by ensuring that financial obligations are recorded when they are incurred rather than when payments are made.
• Senate Directives: The Senate has instructed county governments to prioritize the payment of pending bills. Under this directive, counties are required to prepare structured payment plans, ensuring that pending bills are settled as a first charge on the County Revenue Fund.

Despite these interventions, the reality on the ground paints a different picture. Suppliers and service providers continue to suffer due to delayed payments, with many still waiting for funds owed to them for services rendered years ago.

What Lies Ahead?

The financial standoff between Nairobi County and Kenya Power is a reflection of the deep-rooted fiscal challenges facing Kenya’s devolved units. While both entities insist on their claims, the impasse highlights the need for better financial management, transparency, and adherence to legal frameworks in settling government debts.

If left unresolved, such disputes could set a dangerous precedent, where counties and state agencies engage in retaliatory tactics rather than seeking amicable solutions. Additionally, the broader issue of mounting pending bills remains a ticking time bomb that could cripple service delivery and economic growth.

For now, all eyes remain on the Treasury, Senate, and the respective county administrations to see whether concrete measures will be put in place to resolve the crisis and prevent similar conflicts in the future.