The government has made a U-turn on plans to abandon the Sh376 billion road programme started by retired President Uhuru Kenyatta to upgrade the less-used roads in rural Kenya.
New documents tabled in the National Assembly by Treasury Cabinet Secretary Njuguna Ndung’u show that allocation to the annuity roads programme has been increased nearly fivefold to Sh14.09 billion in the fiscal year starting July, from Sh3 billion in the present financial year.
The annuity programme is a variation of public-private partnerships (PPPs) in which private contractors design, build, and maintain the roads for a predetermined period.
The contractor and the government will each meet agreed portions of the total construction cost. The government will then repay the contractor its portion (for which the contractor will typically have sought financing from commercial banks) in equal instalments (annuity) over a set period from the time a road is completed.
In January, President William Ruto’s government indicated it would abandon the programme, citing poor standards of roads being constructed using the Low Volume Seal Roads (LVSR) technology that was introduced by Kenyatta in 2014.
In the current fiscal year ending June, the roads annuity programme had been allocated Sh3 billion to be used to pave roads with low vehicular traffic volumes. The programme has a total investment of $2.8 billion (Sh376.6 billion).
The national road annuity programme comprises the upgrading of up to 10,000 kilometres of roads in rural Kenya by private investors for $2.8 billion (Sh376.6 billion).
The roads are constructed using technology known as LVSR, which employs bitumen-based seals to pave roads with low vehicular traffic.
Although the technology significantly reduces construction costs by more than 60 percent, the Kenya Kwanza administration argues that the roads are of low quality.
“When we constructed these roads, we anticipated they would be for private vehicles and public transport use only, but they have since been used by even commercial vehicles that carry heavy loads,” said Transport Cabinet secretary Kipchumba Murkomen on January 15.
Several selected PPP road projects were to be implemented through several individual concessions awarded to investors on a PPP basis.
The winners of the contract are to finance, design, build, maintain, and transfer the project roads over a 10-year concession period, including two years of construction and eight years of operation, on an annuity basis.
The first phase of the programme entails upgrading 2,000km of such PPP roads. The contract for these roads was awarded in May 2019, following a competitive bidding process overseen by the Treasury’s PPP Unit.
A payment modality was agreed upon between the Treasury, the contractor, and the participating commercial banks. Under the model, the Treasury is supposed to reimburse the banks at a uniform rate over an agreed period.
After 10 years, the road project will be handed over to the Kenya Urban Roads Authority.
The roads are mostly those that link provincially important centres to each other or higher-class roads. It entails mostly upgrading these roads.
Some of the roads, totalling 44.9km, are being built in Nyeri, Laikipia, Kirinyaga, Embu, Murang’a, and Tharaka Nithi counties.
Other six roads, varying in length from 3km to 7.60km, and totalling 35.1km in length, are being built in Kakamega, Vihiga, Bungoma, and Busia counties in western Kenya.
The World Bank’s Multilateral Investment Guarantee Agency guarantees some of the private investors participating in the programme against the risks of breach of contract, transfer restriction, expropriation, and war and civil disturbance for a period of up to 10 years.
