Airports expansion, SGR to gobble up Sh319.5bn of next development budget

Kenya’s ambition to accommodate larger aircraft and introduce fast trains features prominently in the estimates that Treasury secretary Henry Rotich unveiled last week.

Construction of flagship projects required to facilitate the changes is set to start at the tail-end of President Uhuru Kenyatta’s first term after agencies running the segment received the lion’s share of the development budget.

The Kenya Airports Authority (KAA) which has the immediate task of overseeing direct flights to the US and expanding county airports to accommodate bigger planes, has been allocated Sh8.5 billion for its projects.

To start direct flights, the Jomo Kenyatta International Airport (JKIA) must meet a raft of safety and security parameters under the International Aviation Safety Assessment (IASA). Kenya has been implementing a raft of recommendations by the US government to enhance security, among them separation of passenger arrival and departure terminals, clearing the flight path, and fencing off the airport.

“For KAA, there is an immediate task of remodeling and expanding terminals B, C and D of the JKIA,” Transport and Infrastructure PS Irungu Nyakera told the Business Daily.

“At least 15 per cent of the allocation will be spent on construction of a second runway at JKIA while the rest will be compensation of land owners in Malindi and expansion of the Isiolo runway.”

On the other hand the Kenya Railway Corporation (KRC), which is working on the standard gauge railway (SGR), tops the list of development fund recipients with a total allocation of Sh311 billion for projects in the 2017/18 budget.

The agency is currently overseeing the construction of the multi-billion shilling railway from Mombasa to Nairobi and subsequently to Naivasha and Malaba border post with Uganda.

KRC managing director Atanas Maina declined to respond to our queries. Out of the next financial year’s development budget, however, Mr Rotich says a total of Sh258.6 billion will be financed by loans from development partners. China’s Exim Bank has been the top source of SGR loans. A team of government officials is expected to pay a visit to Beijing next month to finalise the terms of the loans.

The Chinese loans totalling Sh327 billion had previously been used to finance construction of tracks and acquisition of rolling stock (mainly wagons, locomotives and coaches) for the first phase of SGR.

UNSPECIFIED INCOMES

The phase, which runs from Mombasa to Nairobi, is almost complete with trains expected to be launched in June.

According to the estimates, the Kenyan government is supposed to contribute an additional Sh42.7 billion to finance the KRC’s development budget.

The Treasury raises the SGR money through the Railway Development Levy introduced by Mr Rotich in 2013 at the rate of 1.5 per cent on the customs value of home-bound imports, hoping to raise at least Sh22 billion every financial year.

The estimates released last week indicate that the Treasury expects to raise another Sh387.5 million of KRC’s development vote from the corporation’s retained earnings, Sh142 .3 million as grants from donors, and other unspecified incomes totalling Sh9.2 million.

Last week, Mr Maina declined to discuss the new billions set aside in the next year’s budget.

President Uhuru Kenyatta commissioned the second phase of the SGR project, which is supposed to run from Nairobi to Naivasha, late last year.