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Troubled KAA restructures World Bank and AFD loans

 

The Kenya Airports Authority (KAA) restructured loans extended to it by the World Bank and Agence Francaise De Development (AFD), the cash-strapped agency has revealed even as it slid to a Sh6.7billion net loss in the financial year ended June 2021.

KAA board chairman Isaac Awuondo said the debt restructures form part of strategies embraced by the State agency in a bid to stay afloat in a recessionary environment.

“To navigate through the recessionary business environment, the authority consolidated operations to specific terminal facilities at JKIA (Jomo Kenyatta International Airport), renegotiated contracts, implemented mainly externally funded capital projects, negotiated restructuring of AFD and World Bank loans besides leveraging on technology to optimise operations,”  he said in a disclosure.

Debt restructuring typically involves getting lenders to agree to reduce the interest rates on loans, extend the dates when the company’s liabilities are due to be paid, or both. These steps improve the company’s chances of paying back its obligations and staying in business.

Records show that KAA held a total of Sh13.05 billion in long-term loans from the World Bank and AFD as of the 2020/2021 fiscal year. Of the amount, Sh2.15 billion was owed to the World Bank with some Sh1.02 billion due for repayment to both lenders within the year.

KAA said the World Bank through the National Treasury granted a moratorium for 12 months on the repayment of International Development Agency (IDA) on-lent due for repayment between April 2020 and June 2021. IDA is a member of the World Bank that offers concessional loans to developing countries.

World Bank’s Sh1.58 billion northern corridor transport improvement loan is denominated in Kenya shillings with a duration of 23 years from 2004, a grace period of eight years, and a five percent interest rate per annum. The Bretton Woods institution granted a Sh118.7 million Kenya transport sector project loan which is denominated in Kenya shillings with a duration of 23 years from 2011, a grace period of eight years, and an interest rate of five percent per annum.

During the 2020/2021 financial year, KAA did not repay a single cent of the World Bank’s total outstanding loan of Sh2.15 billion.

AFD is a co-financiers in the construction of Terminal 1A and a multi-storey car park which are part of the expansion of the upgrade of facilities project at JKIA. The $ 90 million (Sh11.06 billion) principal loan has a duration of 20 years from 2011, a grace period of five years, and an interest rate at libor plus 2.75 percent per annum.

AFD has also funded the rehabilitation of Moi International Airport through a $ 66 million (Sh8.1 billion) principal loan which has a duration of 20 years from 2014 with a grace period of five years at a Libor plus 3.78 percent per annum.      BY DAILY NATION

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