Nairobi City County Government has been put on spot over an outstanding loan facility of Sh3.7 billion from the Kenya Commercial Bank.
Members of the County Public Accounts Committee sought to get clarification on the details of the loan whose interest had accrued immensely over time.
Appearing before the County Public Accounts Committee on Tuesday,Kenya Commercial Bank Chief Executive Officer Joshua Oigara said that the county had not made any efforts to settle the debt hence the continued rise in interest.
"The county has been in default since day one because the interest charged has been increasing as per the agreement reached,” he stated.
According Oigara, The County Government entered an agreement with the bank seeking help to offset a Sh2.4 billion loan inherited from the defunct Nairobi City Council had acquired from Equity Bank.
The amount has since been skyrocketing from Sh2.4 billion to Sh3.7 billion as a result of the interest.
Oigara said that the loan has been in default since day one in February 2016 when the payments were supposed to take effect.
Committee members questioned whether the acquisition of the loan facility was approved by the County Assembly as was required by the law.
Oigara acknowledged that a public loan has to be approved by the Assembly but agreed that the County Government did not follow the agreed modalities upon which the loan was to be paid.
The Chairman of the Committee ordered the bank to appear before the committee next week with documents ascertaining Assembly approval for the loan facility and specific bank documents detailing the nature of the loan.