Nairobi City Water and Sewerage Company is facing a major financial meltdown, with a new audit report revealing massive losses, ballooning debt, and widespread operational failures that have pushed the utility to the brink of collapse.

Auditor General Nancy Gathungu, in her report for the year ending June 30, 2024, exposed that the company is operating at a negative working capital of over Sh3.4 billion and has been technically insolvent.

She said the situation has been worsened by negligence and collusion within top management.

The audit showed the company is weighed down by debts exceeding Sh5 billion and is losing over Sh8.57 billion annually through non-revenue water—water that is produced but not billed.

At the same time, it is spending more than Sh3.26 billion on a bloated wage bill, further straining its finances.

The revelations were presented during a session of the Senate County Public Investments and Special Funds Committee on Monday, chaired by Vihiga Senator Godfrey Osotsi.

Nairobi Governor Johnson Sakaja appeared before the committee to respond to the findings but struggled to justify the ongoing mismanagement at the utility.

According to the audit, Nairobi Water produced 185.8 million cubic meters of water during the review period but only billed 90.3 million cubic meters. The remaining 95.4 million cubic meters were lost as non-revenue water—representing more than 78 percent of the company’s total operating revenue of Sh10.94 billion.

The report also highlighted serious inefficiencies in billing operations. For half the year, staff relied on estimated figures instead of actual meter readings for 15,320 customer accounts.

An additional 23,384 accounts, which had been billed Sh344.4 million, remained unpaid but still received water services. Even more concerning, 10,192 active accounts were not billed at all.

Governor Sakaja told the Senate committee that the company adopted self-meter reading, where customers send readings via SMS, due to access challenges. He said the meter readers were often blocked by locked gates, aggressive dogs, or even physical confrontations.

Managing Director Nahashon Muguna backed this, saying these field risks made accurate meter readings difficult to obtain.

However, Nairobi Senator Edwin Sifuna was unconvinced.
“With all the force we’ve seen City Hall enforcement officers use to break into properties, what are these places you’re unable to access for six consecutive months?” he asked.

Nominated Senator Hamida Kibwana sought clarity on whether any action had been taken against non-compliant customers. But Sakaja downplayed the extent of the problem, arguing that the affected accounts only made up six percent of the company’s 250,000 customers.

Elgeyo Marakwet Senator William Kisang questioned why the firm had not adopted smart meters to enable remote billing and disconnection of defaulting accounts. Muguna pointed to the high installation cost, a position Governor Sakaja supported, adding that adopting such technology must be guided by a proper cost-benefit analysis.