Powerful interests in the planned construction of a Sh300 billion — nay, Sh500 billion — Mombasa-Nairobi expressway are, no doubt, pushing for the signing of a deal committing Kenya to taking in yet another mega chunk of public debt.
Next week, Treasury officials will be holding talks with the American contractor, Bechtel Corporation, on the project’s financing with potentially big implications on the state of Kenya’s public finance.
One would have hoped that given Kenya’s tight public debt situation, the bureaucrats would care to assess risks better by going for a rigorous process that includes public consultation as the Constitution demands. That is certainly not the case going by Treasury secretary Henry Rotich’s announcement that talks with the US firm Betchel on the financing model will take place next week.
Bechtel prefers a government-to-government financing deal, which it says keeps the cost at Sh300 billion. Going for private capital, it says, could cost the taxpayers up to Sh500 billion.
With government-to-government deal, commercial element of the loan is eliminated, encumbrance of the company and particularly risks associated with a privately financed toll road are removed. Simply put, Betchel would construct the road and move on.
That is not all. The direction the matter is taking raises certain fundamental questions. Top on the list is why a private company would be handpicked and then come round to choosing the financing model that befits a public project.
The expectation, which is supported by law is that Betchel would only be single sourced if brought in by the US government in a bilateral financing deal. Private funding should automatically come with open bidding to test and pick whoever can do the job at the least cost.
That does not even start to address crucial issues that Mr Rotich, who has presided over a rapid build-up of public debt to about Sh5 trillion, should answer. First, does Kenya really need this expressway, which will practically run parallel to the Standard Gauge Railway? Hasn’t it been the government’s position that the SGR should help remove trucks from the roads – clearing the highway and decreasing the damage they cause?
And do the expected benefits of this road justify the additional tax burden (road tolls) on the economy that will come with it? These are the defining issues that ordinary Kenyans would like Mr Rotich to address before putting pen to paper on this project.
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