Mombasa, Kenya – Wednesday, October 29, 2025: The Kenya Ports Authority (KPA) management, led by Director General Captain William Ruto, is under scrutiny after a new audit by the Office of the Auditor General, Nancy Gathungu, revealed that the authority illegally retained Sh6.2 billion from the Sh22 billion freight income tied to the Standard Gauge Railway (SGR) — a move that contravenes public finance laws.
According to the damning audit report tabled before Parliament, Auditor General Nancy Gathungu raised concerns over how the KPA diverted billions meant for the SGR loan repayment escrow account, exposing the Kenya Railways Corporation (KRC) to potential loan default and financial strain.
Members of Parliament sitting on the Public Debt and Privatization Committee are now seeking answers from Captain Ruto and his management team on how KPA flouted the Public Finance Management Act by withholding billions of shillings meant for loan repayment. The MPs also want to know the whereabouts of the interest generated from the withheld funds and how that money has been utilized.
Billions Withheld Without Legal Backing
The audit shows that between July 2023 and December 2024, KPA collected Sh22 billion in freight income from goods transported along the Mombasa–Malaba SGR line. However, only Sh16 billion was remitted to the escrow account meant for repaying the Chinese loan, while Sh6 billion remained under KPA’s control.
“The audit established that the retained revenues catered for potential refund claims arising from tariff disputes and discounts, despite the lack of a provision for the retention in the Take or Pay Agreement,” reads part of the Auditor General’s report.
Gathungu’s findings emphasize that the Take or Pay Agreement, which governs SGR revenue remittance, only allows for the deduction of an agreed service fee — not the retention of additional funds.
“This unauthorised revenue retention deprived Kenya Railways of sufficient funds required for loan repayment,” Gathungu noted. “It indicates non-compliance by KPA and adversely affects Kenya Railways’ ability to meet its financial obligations.”
Impact on SGR Loan Repayments
The audit further reveals that the withheld Sh6.2 billion weakened Kenya Railways’ capacity to service the Sh568 billion loan borrowed from China to construct the SGR. The loans, signed in 2014 and 2015, financed the railway’s phased construction from Mombasa to Malaba.
Gathungu’s report adds that Kenya Railways is already struggling to meet loan obligations for three on-lent loans totaling Sh569 billion, including capitalized interest accrued during the grace period.
“The corporation was not meeting its loan obligations for three on-lent loans totaling Sh569 billion,” the report states.
Public and Parliamentary Pressure Mounts
The revelations have triggered growing concern among lawmakers and the public over the financial management of Kenya’s flagship SGR project, which has been marred by cost overruns and operational inefficiencies.
MPs have vowed to summon both KPA and Kenya Railways officials to explain the financial discrepancies and outline corrective measures to ensure full compliance with the SGR revenue agreements.
As Kenya continues to grapple with ballooning public debt, the findings have reignited debate about transparency and accountability in the management of strategic state corporations.
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