The Kenyan Government has made a payment of Ksh2.48 Billion towards the settlement of a guaranteed debt incurred by the government in 1970 for the failed establishment of a chemicals and fertilisers company near Changamwe, Mombasa as reported by the Business Daily on December 17.
Years down the line, Kenyan taxpayers continue to bear the weight of servicing the debt.
A report by the parliamentary Public Accounts Committee indicated that the latest payment by the government took the total amount paid so far to Ksh6.33 billion.
"The Government of Kenya has made a payment of Ksh2.48 billion towards the settlement of government debts incurred in 1970 on account of Ken-Ren Chemical Fertiliser Company," the Public Accounts Committee stated on a report on government finances.
Treasury Principal Secretary Julius Muia told the PAC that Kenya was obliged to pay the debt especially after the Belgian bank, Ducroire, filed a case against Kenya to the International Chamber of Commerce.
Kenya was found liable as a guarantor and ordered to pay the Ksh 2.48 billion debt to Ducroire.
Muia argued that the government paid the billions to avert a negative credit rating that could taint her reputation and bar the country from the international debt markets.
Mzee Jomo Kenyatta's government entered into a deal with an American company, N Ren, to guarantee the construction of a fertiliser plant back in 1970 at the cost of Ksh 350 million at an interest rate of 8.5 percent as reported by Business Daily.
The Debt had since risen to Ksh 6.3 billion.
Kenyatta government and N-Ren formed a company under the name Ken-ren Chemical and Fertiliser Company limited. The entity would venture into the manufacture of fertiliser for both domestic consumption and export.
An article by Business Daily dated August 17, 2016, reported that Ken-Ren acting on advice from N-Ren entered into various financing and equipment procurement contracts with a number of Belgian and Austrian banks and suppliers, the Kenyan government as its guarantor.
In total, Kenya offered a guarantee of Ksh 350 million to Ken-Ren. The suppliers of equipment and machinery were Coppee-Lavalin of Belgium and Voest Alpine of Austria.
However, the project failed to materialise and the company, Ken-Ren, was placed under receivership in December 1978, with the Registrar-general appointed the official receiver and provisional liquidator as reported the Business Daily.
