Government Caught Red-Handed: Ksh58 Billion Railway Fund Secretly Diverted to Oil Marketers!
The government diverted Ksh58 billion from the Railway Development Levy Fund (RDLF) to clear outstanding debts owed to oil marketing companies.
A recent audit report reveals that funds originally allocated for the development and maintenance of the standard gauge railway (SGR) were used to pay oil marketers in the financial year ending June 2024.
According to Auditor General Nancy Gathungu, the RDLF, which falls under the Ministry of Transport, lent Ksh58 billion to the State Department for Petroleum to settle the debt. However, this action violates the Petroleum Development Fund Act of 1991.
Gathungu’s 2023-2024 National Government Funds report highlights the irregular borrowing of Ksh58,279,451,755 from the RDLF to pay oil marketers, stating that it contradicts legal provisions governing the Petroleum Development Fund (PDF).
The RDLF is designed to finance railway infrastructure projects, particularly the SGR, through a 2% levy on imported goods. On the other hand, the PDF, established under the Petroleum Development Fund Act of 1991, is meant to fund oil distribution facilities and industry improvements through a levy imposed on petroleum fuel.
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A crucial legal requirement of the PDF is that it cannot borrow funds to finance its operations. It must rely solely on the revenue collected through levies, meaning external loans, bonds, or other financial instruments are not permitted.
Therefore, using borrowed funds from the RDLF to pay oil marketers breaches financial regulations. The audit report did not provide any justification from the Ministry of Transport or RDLF officials regarding this transaction.
The total amount paid to oil marketers remains unclear, but the government and oil firms have been embroiled in disputes over mounting debts. As of June 2023, the government owed approximately Ksh45 billion to oil marketers for fuel subsidies. This debt was later converted into a three-year Treasury bond, allowing oil companies to receive periodic interest payments until maturity.
The debt conversion brought the total payout to Ksh169.89 billion, easing financial strain on the oil sector while raising concerns about the misallocation of public funds.
Government Caught Red-Handed: Ksh58 Billion Railway Fund Secretly Diverted to Oil Marketers!
