Kenya Railways risks losing Sh15bn land to grabbers

The Auditor-General has revealed taxpayers risk losing land worth Sh15.17 billion belonging to state-owned Kenya Railways Corporation to cartels that have subdivided it and sold parcels to private developers.

Auditor-General Nancy Gathungu says the commissioner of lands and defunct local authorities hived off parcels of the freehold land and sold it to third parties, some of whom have developed them.

“As reported previously, various parcels of land were allocated by third parties without the consent of the Corporation by either the Commissioner of Lands or the defunct local authorities,” said Ms Gathungu in her audit report on the company for the financial year to June 2020.

She says nine industrial plots at the Limuru railway station measuring three acres have been grabbed and subdivided among private developers, along with two acres at the Kikuyu station and another of about one acre near the Mombasa station.

This is in addition to 529 other land parcels spread throughout the country that have also been grabbed, illustrating the difficult task of repossessing the land.

“However, management has sought court intervention to repossess 27 parcels of land,” notes Ms Gathungu.

She also revealed that another seven-acre tract belonging to Kenya Railways in Ziwani Estate, Nakuru, has been encroached on by the county government and is being used as a bus park.

The land had been allocated to customers on long 25-year leases, with Sh37 million already paid to Kenya Railways as premium and annual rents of Sh13.3 million.

“Management has not explained the steps being taken to revert the land to the tenants. Further, the Corporation continues to lose the opportunity to collect the annual rent of Sh13.3 million,” she said.

This in addition to another 80 acres owned by the company at the Nakuru railway station that has been encroached on by the county government.

The land had been leased temporarily, but the county encroached on 10 acres, making the company lose Sh5.6 million annually in rental revenue.

Kenya Railways was also put on the spot for failing to collect Sh151 million for leasing its land in Mombasa, as tenants use it without paying for it. 

“The tenants have not been paying their lease dues. Further, customers who were given lease accounts in 2018 were not invoiced for 2019 and the corporation lost about Sh10 million annually for non-billing,” the audit report says.

Kenya Railways continues to struggle financially and grew its losses nearly three times to Sh24 billion in the year to June 2020, up from a loss of Sh8 billion in 2019.

The company is also technically insolvent, with its liabilities of Sh69.2 billion exceeding its assets of Sh59.9 billion.

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