The Nairobi City Water and Sewerage Company (NCWSC) has been given the green light by the Nairobi County Government to avail a Sh2.17 billion long-term business loan to settle outstanding pension debts and avoid mounting penalties.
NCWSC, a wholly-owned subsidiary of the Nairobi County Government, owes money to the Local Authority Pension Trust (Laptrust).
Currently, the outstanding amount includes Sh981.19 million in accrued interest, Sh937.91 million actuarial deficit, and Sh317.53 million in unremitted contributions, all owed to Laptrust.
Charles Kirish, a member of the Nairobi City County Executive Committee for Finance and Economic Planning, said the county had no objection to the water company's application for a loan from a commercial bank.
The NCWSC management initially wrote to Attorney General Justin Muturi seeking his legal opinion on the matter, but Mr Muturi advised them to seek approval to borrow a loan from Nairobi County.
“We stress that the provincial government has no objection to the company’s efforts to obtain assistance funding. The debt will be used to settle outstanding pension arrears with the Local Authority Pension Fund (Laptrust), Mr Kirish said in a letter to NCWSC Managing Director, Nahashon Muguna.
The pension debt, divided between Sh1.06 billion accumulated in the pre-conversion period and Sh1.15 billion accumulated between April 2013 and December 2021, has grown over the years due to unpaid contributions, accrued interest and actuarial deficits.
The debt arose after the National Water and Sanitation Commission absorbed employees who were working in the defunct Nairobi City Council Water and Sanitation Department.
Following their absorption, employees continued to make contributions to Laptrust at the rate of 12% to 15% of employee and employer superannuation pay, respectively.