The Treasury is returning donor money stolen from the free primary education kitty, the Nation has learnt.
About Sh164 million was paid to Britain's Department for International Development (DfID) on Monday, topping up the Sh14 million refunded in July.
The Canadians are also expecting a refund of Sh52 million.
Made decision"Treasury has made the decision to refund the money on behalf of the government," Education permanent secretary James ole Kiyiapi said on Tuesday. without elaborating.
DfID spokesperson Rose Brown said the money will be ploughed back to the education sector through non-governmental organisations.
"It is right for the UK government to be fully reimbursed for our share of funds that have been stolen as we have an obligation to our taxpayers to ensure that their money is used for the intended purpose.
"We want to grow programmes such as scholarships for needy students and distribution of textbooks to schools, besides improving accountability in the sector," Ms Brown said.
She said that 2.6 million textbooks for more than 320,000 school children in slums have since been bought and distributed through NGOs.
"We are working through non-governmental and civil society organisations, including the Kenya Independent Schools' Association and the Aga Khan Development Network, to deliver different components of the education programme."
Former British High Commissioner Rob McCaire, his Canadian counterpart David Collins and World Bank's Johannes Zutt have demanded that the government refunds the money misappropriated. (READ: Britain: Give us back our money)
The Canadian High Commission said it had furnished Treasury with its bank details and was expecting a refund of Sh52.4 million.
"We are in touch with Finance PS Joseph Kinyua and we are finalising details of the payments," First Secretary Tim Colby said.
Britain had pumped Sh7 billion into the free education programme when revelations of massive corruption were unearthed by a Treasury audit.
"The UK government will push the government of Kenya hard for return of the UK's share of lost funds," DfID deputy head Mike Harrison said when the scandal broke mid this year.
The audit estimated that Sh8.2 billion could not be accounted for in the first phase running between 2005 and 2009.
However, the figure was scaled down to Sh4.6 billion after a review of some of the documents that had not been submitted earlier.
The audit called for removal of finance, accounting and procurement staff at the Education ministry. It also recommended that former PS Karega Mutahi should take responsibility for the loss of the billions on his watch.
Top officials in the ministry diverted the funds to private accounts and in other instances the money was withdrawn from school accounts and banked in private accounts.
Others used fake receipts and unaccounted imprests to drain the kitty. The Criminal Investigations Department is yet to conclude investigations into the scandal after it took over the case from the anti-graft agency.
Treasury spokesperson Buku Munyori said taxpayers will not lose a cent "as the culprits will be surcharged the full amount."
More follow suitThe free primary education was largely funded by World Bank, DfID, Cida, USAID and the Japan International Co-operation Agency.
The World Bank and other donors usually demand a refund of stolen cash before disbursing more money for projects implemented in phases.
The office of the Prime Minister and Treasury are understood to be preparing to refund the World Bank cash lost under the Kazi kwa Vijana programme.