Senate flags ballooning wage bills in county water companies

The Senate has raised concerns over the high wage bills of water companies, with Nairobi City Water and Sewerage Company (NCWSC) singled out for a Sh2.5 billion wage bill, which is above the 35 per cent threshold of its budgetary expenditure.

Senate County Public Investments and Special Funds Committee chairman Godfrey Osotsi said in a report tabled in the House that the city water company also led in the misappropriation of customer deposits, with Sh1.3 billion utilised contrary to the law.

Osotsi expressed concern over the poor financial performance of most water companies, citing NCWSC’s negative working capital of Sh1 billion as an example.

“The other very important aspect is the matter of long-outstanding receivables. These are customers who have not paid their bills, most of them institutional. Leading in this category is NCWSC, which is reported to have long-outstanding receivables of Sh3.7 million in the 2024–25 financial year,” said Osotsi.

The Vihiga Senator noted that national government entities—including the Ministry of Defence, the National Police Service, the State Department for Correctional Services and the General Service Unit—collectively owe NCWSC Sh442 million.

He added that non-revenue water remains a major concern. Nolturesh Water and Sanitation Company Limited in Kajiado has non-revenue water at 80 per cent, meaning the company earns from only 20 per cent of the water it produces.

“On the issue of high non-revenue water in many counties, it is high time counties worked towards creating modern water transmission systems and reducing non-revenue water to at least 25 per cent, so that this vital resource is not lost but serves residents effectively,” said Osotsi.

He also told the Senate that county public hospitals face a major threat due to systemic violations of the Facility Improvement Fund Act, 2023, with most failing to comply.

“The majority of county governments transferred hospital-generated revenue to the County Revenue Fund (CRF), thereby denying facilities the resources meant to improve service delivery. This was observed mainly in West Pokot, Murang’a, Makueni and Nairobi,” he said.

He highlighted critical staffing and equipment shortages across counties, noting that hospitals have failed to meet the Kenya Quality Model for Health standards. There is a severe shortage of specialists such as radiologists, paediatricians and other technical staff.

Osotsi added that essential equipment—including Intensive Care Unit (ICU) beds, High Dependency Unit (HDU) units and dialysis machines—were either lacking or non-functional. For instance, Mutuini Hospital in Nairobi has only two medical officers against a requirement of 16 and no ICU beds.

He further noted that Busia Referral Hospital lacks an ambulance, while its mortuary is operating beyond capacity.

“Unconfirmed Social Health Authority or National Health Insurance Fund receivables totalling hundreds of millions of shillings remain unverified, with no structured recovery plans in place, severely constraining hospital cash flows. Mbagathi Hospital in Nairobi, for example, reported Sh279.6 million in outstanding NHIF claims,” said Osotsi.

The senator also observed that most counties have failed to comply with the Urban Areas and Cities Act, which requires municipalities to operate autonomously, with budgets often not prepared and most functions controlled by county governments.

He cited that Machakos, where municipalities granted charters in 2018, remain underfunded and non-operational. In Narok, Kilgoris Municipality received no funding from the county executive during the year under review and received a disclaimer of opinion for failing to submit financial statements.

Osotsi described county special funds as avenues for corruption and said they are in a state of disrepair, citing unsupported receivables and bursary funds lacking acknowledgement receipts from beneficiary institutions.

“We also noted challenges in the recovery of loans issued through Enterprise Funds, including the Youth Enterprise Fund and the Women Enterprise Fund, with most loans remaining unpaid across nearly all counties,” he said.

He added that many counties use these funds as fallback sources during delays in disbursements, withdrawing money irregularly without adhering to the Public Finance Management (PFM) Act.

Osotsi further cited widespread non-compliance with the legal frameworks governing such funds and recommended the abolition of investment and enterprise funds, terming them sources of corruption with poor recoverability.

Kisumu Senator Tom Ojienda raised concerns over the expiry of legislative instruments establishing some county entities managing funds, noting the need for regularisation.

He also observed that many hospitals face challenges in managing funds and processing the charges they receive, and called for reforms to how facilities operate under the County Revenue Fund framework.