The National Bank of Kenya(NBK) is demanding more than Sh500 million from Nairobi County after City Hall ended a revenue collection deal last year.
The county cancelled the contract in February last year, about two-and-a-half years after entering into the deal that enabled NBK to provide automated revenue collection services.
An audit report has established that following the termination of the contract, the lender last year wrote to the county demanding Sh566.2 million in unpaid debt, in addition to damages for investments it had made.
“On February 24, 2022, the National Bank of Kenya responded to the County indicating that they had invested heavily in the project through various channels, which were still active, including the mobile App, mobile short code service and web portal, which were still active,” the Auditor-General notes.
The audit report capturing the period to June last year also notes that following the contract with the county, the bank had supplied more than 500 gadgets to revenue staff.
“The county had failed to pay the bank a significant debt of Sh566,278,045, contrary to clause 16.4 of the agreement and the bank demanded immediate payment of the debt together with damages, which were to be determined, for breach of contract in relation to premature termination. Management has, therefore, exposed the county government to loss of funds premature termination of the contract,” the audit states.
This means that the county is now exposed to huge losses as the lender demands to be paid for investments it had made.
The contract in question, entered on June 10, 2019, touched on the provision of automated revenue collection and value-added financial services such as track of revenue assets, monitoring and tracking revenue collection activities, sealing revenue leakages and enforcing payment of services delivered. It was to run for 5 years.
