The government has been asked to write-off Sh2.5 billion debt for Kenya Utalii College (KUC) as it is facing serious financial crisis.
Tourism Cabinet Secretary Najib Balala said the college is currently indebted to the tune of Sh3 billion.
Of the Sh3 billion liability, Sh2.5 billion is a debt which has accumulated as a result of interest and penalties from a Sh140 million loan the college borrowed from the government in 1996.
The loan was used for the refurbishment of Utalii Hotel in Nairobi between 1996 and 2000.
Mr Balala said the college had by December last year repaid Sh13 million whereas the loan plus interest and penalties had accrued to Sh2.5 billion.
“I request the government to waive the interest and penalties accrued on the loan in an effort improve the college’s working capital,” Mr Balala said.
The college, he added, plays a pivotal role in tourism since majority of the students who graduate at the institution work in the hospitality industry.
“Efforts must be made to save the college from the financial woes for the sake of students who will be leaders of tomorrow in the industry,” he said.
In the financial year 2015/2016, the college had total revenue of Sh711 million, with Sh168 million being its own revenue collection, Sh260 million from government transfers and Sh283 million from Tourism Fund.
Speaking to the Nation by phone, Mr Balala said KUC was unable to service the Sh140 million loan, the interest and penalties accrued due to dwindling finances.
“The hotel, whose revenues were meant to repay the loan, is a training laboratory for the college. Its profitability is highly compromised by capacity and high operational costs due to its orientation as a training unit.”
Mr Balala called on the Tourism Fund to increase funding to the college for it meet its operational costs.
Mr Balala said the financial challenge has not affected training at the college.