State faces fines over Sh3.6bn unpaid Southern bypass bill

Auditor-General Nancy Gathungu

Auditor-General Nancy Gathungu. PHOTO | NMG

Kenya has delayed payments of more than Sh3.6 billion owed to a Chinese contractor that built the Nairobi’s Southern bypass and landowners displaced by the project, exposing the State to penalties and interests.

Auditor General Nancy Gathungu says Kenya has fallen back in remitting Sh1.2 billion to China Road and Bridges Corporation (CRBC) for setting up the 28.6-kilometre road, which links Nairobi and Kiambu counties via Lang’ata and Kikuyu suburbs.

It has also delayed Sh2.4 billion compensation to landowners displaced from the project corridor.

The government has spent Sh21.5 billion on the road having paid the Chinese contractor Sh19.4 billion and landowners Sh2.1 billion before falling back after the road was completed.

Ms Gathungu now warns that the taxpayer will be saddled with more interests and penalties if the country does not regularise the payments.

“Although the management has committed to liaise with the line ministry and the National Treasury for adequate budgetary allocation and timely exchequer releases for prompt payments in the subsequent financial year, the project is at risk of incurring additional costs by way of interests and penalties with the continued delay in making the payments,” Ms Gathungu said.

CRBC constructed the bypass using a Sh14.6 billion loan from China Exim Bank and Sh7 billion from the State.

China has tightened its grip on Kenya’s mega projects. China Communications Construction Co (CCCC) and its subsidiary CRBC hold the bulk of the road and railway contract, earning about Sh777.1 billion.

Besides building all the major roads and highways around Nairobi, the two have also built two ports and 23 roads around the country.

The Chinese government-owned firm is also building the Sh65 billion Nairobi Expressway that is nearing completion.

China’s State-linked firms are getting ahead of the rest partly due to Chinese government loans that had increased to $7.09 billion (Sh797.77 billion) by June last year.

The Southern Bypass allows traffic from Mombasa to western Kenya and Uganda to bypass downtown Nairobi, thereby reducing traffic in the Central Business District.

It starts at the junction of the Nairobi-Mombasa road and Likoni Road, approximately 10 kilometres south-east of the city centre.

The road then loops through the south-western suburbs of Nairobi, including the northern environs of Nairobi National Park, Uhuru Gardens, Lang’ata, Dagoretti and to Kiambu County and then turns northwards, ending in Kikuyu town.

The State built the by-pass by diverting long-distance traffic from and to the port city of Mombasa, destined for western Kenya and the land-locked countries of South Sudan, Uganda, Burundi and the Democratic Republic of the Congo.

The bypass was commissioned by President Uhuru Kenyatta and the late President of Tanzania, John Magufuli, on November 2, 2016.

Kenya seeks to reinstate payment of toll fees on both new and existing roads in a move that paves the way for the introduction of user fees on major roads, bridges and tunnels.

The proposed law empowers the Transport Cabinet Secretary to declare any road or a portion, including a bridge or tunnel on a public road, as a toll road.

The Treasury told Parliament that tolling will be applied on roads that have traffic to generate adequate fees like Thika and Jogoo roads.

Motorists pay a levy of Sh18 for a litre of diesel and petrol that goes into maintenance and rehabilitation of roads through the Kenya Roads Board.

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Editor's note: An earlier version of this story erroneously reported that Kenyan has fallen back in paying a Chinese loan used for the construction of Nairobi's Southern Bypass. It has since been updated to reflect that Treasury has delayed to pay  Sh3.6 billion owed to a Chinese contractor who built the road.