KenGen and KPA Slash State-Guaranteed Debts by Sh11.76 Billion

The Kenya Electricity Generating Company and the Kenya Ports Authority have made substantial repayments on their State-guaranteed loans. The two entities together cleared Sh11.76 billion during the nine months to March 2026.

Controller of Budget Margaret Nyakang’o released the figures in her latest review. KPA paid Sh6.77 billion while KenGen settled Sh4.99 billion. This reduced KPA’s outstanding guaranteed loans to Sh39.39 billion and KenGen’s to Sh22.39 billion.

Kenya Airways on the other hand made no repayment. Its guaranteed debt portfolio increased by Sh52 million to Sh9.74 billion over the same period.

The repayments occurred in a financial year when the Treasury made no budget allocation for settling guaranteed loans. This exposed Kenya Airways which has in previous years depended on direct government support.

Dr Nyakang’o explained that there was no provision in the 2025/26 financial year for such payments. A government guarantee represents a commitment by the National Government to repay loans taken by state entities.

Guaranteed debt forms part of the overall public debt. It falls under legal limits and requires close monitoring for fiscal risk and transparency.

The shilling’s movement against the dollar contributed to the rise in Kenya Airways’ debt. The exchange rate shifted from Sh129.23 in June 2025 to Sh129.93 by March 2026.

Overall the total stock of guaranteed loans dropped to Sh71.53 billion in March from Sh83.24 billion in June last year. The part payments by KPA and KenGen drove this decline.

Treasury guaranteed four loans worth Sh46.16 billion to KPA between 2007 and 2021. KenGen received guarantees for seven loans valued at Sh27.39 billion between 1997 and 2021.

KenGen used its facilities to upgrade geothermal plants in Olkaria and the Sondu Miriu Hydro Power Station. KPA applied the funds to develop the Port of Mombasa.

Kenya Airways tapped its guarantee in 2017 for loans from local banks. The debt is owed to MTC Trust and Corporate Services Limited.

In past years the government stepped in to service part of Kenya Airways’ debt. For instance in the year ended June 2023 Treasury paid Sh12.326 billion comprising Sh10.64 billion principal and Sh1.683 billion interest.

The latest performance by KenGen and KPA shows improved capacity to service their obligations independently. This contrasts with the ongoing challenges at the national carrier.

The developments come as public debt management remains a key focus for authorities. Reduced reliance on government bailouts for these major state corporations eases pressure on the national budget.