Parliament Directs Treasury to Bail KU Out of Chinese Loan

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Medical equipment inside Kenyatta University Teaching and Referral Hospital

Parliament has asked the National Treasury to immediately allocate Sh1.6 billion to Kenyatta University Hospital to trigger the release of undisbursed loan owed to the Chinese government to operationalize the training facility.

The House says Sh656,682,2017 is needed for dry run budget and Sh1,060,490,567 for the soft run of Kenyatta University Teaching and Referral Hospital considering that the facility has been lying idle and the university is currently facing financial constraints.

“The project implementation was to take five years from 2011 at a cost of Sh8.8 billion. Two years after the intended operational year (2016), it is still idle with an amount of Yuan 142,862,209 (Sh1.37 billion) undisbursed,” Ms Sabina Chege, who chairs the National Assembly’s Committee on Health said in a report.

“During this period, the warranty of the equipment has expired and repayment of the Chinese Exim Bank loan is due to start on September 21, 2018,” Ms Chege said in the inquiry report.

The MPs said they were doubtful that the university meet its obligation to pay the Treasury interest due on September 30, 2019 considering the hospital is idle and Kenyatta University (KU) is currently facing financial challenges.

The committee has recommended that the Treasury allocated the Sh1.6 billion through the supplementary budget for ratification by the National Assembly.

“This will trigger the release of undisbursed loan of Sh1.37 billion for personnel and capacity building,” the report says.

Ms. Chege said the hospital, once operational will ease the burden on Kenyatta National Hospital and neighboring level five hospitals of Kiambu and Thika.

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Despite the laudable foresight in conceptualizing the hospital, the university and the ministry concerned failed to plan for dry and soft run budgets, despite this being an obvious oncoming expenditure leading to the current quagmire,” the MPs said.

The committee said the university had a sound plan, as confirmed by the Treasury, to run and manage the hospital.

They said the original plan then shifted to public-private partnership (PPP) model after the Treasury declined to commit exchequer allocations citing fiscal challenges.

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