The Senate Standing Committee on Finance and Budget led by its chairperson Mandera County Senator Ali Ibrahim Roba on Wednesday, May 31 rejected the proposed Prompt Payment Bill aimed at protecting suppliers to the government from late payment.
According to the committee, the bill was flawed as paying suppliers on time will depend entirely on the availability of funds from the exchequer.
Additionally, funds from the exchequer will depend on the revenue collection performance which often hinders planned projections.
It also warned that the proposed interest rates to be charged to procurement entities as a result of late payments will be an additional cost and burden to the existing menace of pending bills.
The Senate Committee received views from, the Council of Governors (CoG), Commission on Revenue Allocation (CRA), Controller of Budget (CoB), Kenya Private Sector Alliance (KEPSA), and the Institute of Certified Public Accountants of Kenya (ICPAK) among others.
In the bill proposed by Senator Mariam Omar, sought to provide a legal framework for prompt payment for the supply of goods, works, and services procured by government entities at both levels of government.
It further provided that where a procuring entity returns an invoice, the procuring firm shall pay the supplier at least 50 per cent of the amount due or as the procuring entity and the supplier may agree and in that respect, a supplier who receives an invoice from a procuring entity shall, within 14 days, deliver a corrected invoice to the procuring entity.
Furthermore, interest shall accrue upon the expiration of 14 days after the receipt by the procuring entity of a corrected invoice or after the prescribed payment date, whichever is the latter.
The bill suggested strict penalties for all those who fail to pay the suppliers without a reasonable explanation.
Some of the penalties include a fine not exceeding Ksh1 million or imprisonment for a term not exceeding 5 years or both.
On its part, the Senate Committee argued that the penalties proposed in the bill were unrealistic as the accounting officers had no control over the availability of funds to pay suppliers.
However, Senator Omar rejected the conclusion of the Senate adding that she will continue pushing for the bill to be passed.