The Kenya Electricity Generating Company (KenGen) and Kenya Ports Authority (KPA) have paid a combined Sh11.76 billion of their State-guaranteed loans even as Kenya Airways (KQ) struggles to clear a similar facility.
A budget review by the Controller of Budget for the nine months to March 2026, shows that KPA paid Sh6.77 billion while KenGen settled Sh4.99 billion, reducing their guaranteed loans to Sh39.39 billion and Sh22.39 billion, respectively.
But Kenya Airways was unable to make any part payment of its guaranteed loan, with the portfolio rising by Sh52 million to Sh9.74 billion as at March.
The loan repayments by KenGen and KPA come in a year when Treasury did not allocate cash to pay guaranteed debt, exposing Kenya Airways, which has in the past relied on the State’s support to pay the loans.
‘There was no budget allocation for settling guaranteed loans in the financial year 2025/26,’ Dr Margaret Nyakang’o, the Controller of Budget, said.
A guarantee is an absolute or conditional promise, commitment or undertaking by the National Government to partially or completely repay any loan on behalf of a State entity.
Guaranteed debt is part of the overall public debt and is subject to the public debt limits set under the law, underscoring why these loans must be closely monitored as part of the fiscal risk management and debt transparency.
Dr Nyakang’o added that shilling’s fluctuations against the dollar were instrumental in increasing the stock of KQ’s guaranteed debt from Sh9.68 billion as at June last year.
‘Notably, the increase in guaranteed debt for Kenya Airways was as a result of movements in the exchange rate of Kenya Shillings to the US dollar that varied from Sh129.23 in June 2025 to Sh129.93.’
The part payment of KPA’s and KenGen’s debt helped lower the total stock of guaranteed loans to Sh71.53 billion in March from Sh83.24 billion in June last year.
Treasury guaranteed four loans worth Sh46.16 billion to KPA between 2007 and 2021 and a further seven loans to KenGen valued at Sh27.39 billion between 1997 and 2021.
The one for KQ was tapped in 2017 as a guarantee for loans taken from local banks. The debt is owed to MTC Trust and Corporate Services Limited.
KenGen tapped the loans to upgrade its geothermal plants in Olkaria and the Sondu Miriu Hydro plants, while those for KPA financed development of the port of Mombasa.
Treasury has in the past paid part of KQ’s debt, mainly due to the financial struggles that rendered the national carrier unable to service this facility.
For example, in the year ended June 2023, Treasury serviced Sh12.326 billion worth of guaranteed debt for KQ.
The payment comprised a principal of Sh10.64 billion and interest of Sh1.683 billion.