The Office of the Auditor General (OAG) has raised concerns over long-outstanding trade and other receivables inherited from the defunct Nzoia Water Services Company Limited (NZOWASCO), after gaps were noted in documentation and debt recovery efforts during the 2024/2025 financial year.
When Trans-Nzoia governor George Natembeya appeared before the Godfrey Osotsi-led Senate County Public Investment Committee, the water utility reported an opening receivables balance of Sh213.4 million as of July 1, 2024, which rose to Sh251.7 million by June 30, 2025 a move followed by debts inherited from NZOWASCO following its dissolution.
''The opening balance relates to receivables inherited from the defunct Nzoia Water Services Company Limited. However, no documentary evidence, including invoices and account statements, was provided for audit review to support the inheritance. In addition, the rate and basis for the provision for doubtful debts amount to Kshs 62,744,474.’’ The OAG reported.
During the county executive interrogation, the auditor-general noted that no sufficient documentary evidence, including invoices and statements of account, was provided during the audit to support the inherited receivables.
''No evidence was provided to confirm measures or efforts being made by the management to recover these long-outstanding receivables. In the circumstances, accuracy, completeness, and recoverability of the trade and receivables amount of Sh.251,703,753 could not be confirmed,’’ OAG reported.
Natembeya disputed the audit findings, maintaining that the receivables inherited from the defunct NZOWASCO, totaling Sh256.9 million, are supported by ageing schedules, account statements, and invoices submitted as annexures to the audit.
‘’The trade and other receivables amounting to Sh.256,863,037 inherited by defunct NZOWASCO, as observed by the auditor are supported by the attached ageing schedule, statements of account and account invoices,’’ Natembeya told senators.
Natembeya explained to senators that the Sh62.7 million provision for doubtful debts was arrived at following an internal assessment of debt recoverability, informed by a debt categorisation exercise conducted during the year under review.
''The provision for doubtful debts amounting to Sh.62,744,474 was determined based on management’s assessment of the recoverability of outstanding receivables, informed by the debt categorisation exercise undertaken during the period under review,’’ Natembeya said.
Natembeya has said that NZOWASCO has established a revenue enhancement committee to strengthen billing and collection, alongside the implementation of an approved debt management policy
‘’To recover the debts, management has put in place a revenue enhancement committee to champion billing and collection efforts. In addition, management is implementing an approved debt management policy that outlines debt recovery measures,’’ Natembeya said.
The OAG has also revealed that there is significant budgetary control and performance gaps at an Nzoia-based water services company after it failed to meet its revenue targets and fully utilise collected funds.
‘’The statement of comparison of budget and actual amounts reflects total budgeted receipts of Sh. 376,544,117 against the total actual receipts of Sh. 277,085,382, resulting to under-collection of Sh. 99,458,735 or 26 percent of the budget,’’ OAG stated.
The OAG said that for the budgeted and actual figures, the company had projected total receipts of Sh.376.5 million but realised only Sh.277.1 million, resulting in an under-collection of Sh.99.5 million, equivalent to 26 percent of the approved budget.
Natembeya said that the revenue shortfall is due to ageing infrastructure developed in 1984, which is prone to frequent leaks and bursts, significantly reducing water sales.
''The company’s failure to collect Sh. 99,458,735 of the projected budgeted receipts of Sh. 376,544,117 is attributed to aged infrastructure developed in 1984, which is prone to leaks and bursts that affect the company's water sales. Delays in the installation of new pumps at the Nzoia treatment plant also affected water sales.’’ Natembeya said.
Regarding the unspent Sh.51.5 million, Natembeya explained that the funds were earmarked for capital-intensive projects whose implementation spans beyond the 2024/2025 financial year into the current period.
However, the audit findings highlighted persistent challenges facing water utilities, particularly ageing infrastructure and delayed capital projects, which continue to weigh heavily on revenue performance and service delivery.
