Kipchumba Murkomen plans roads bond for Sh140bn billsFriday October 21 2022
The government will issue a roads bond to pay off Sh140 billion owed to contractors and to finance ongoing road projects.
Roads, Transport and Public Works Cabinet Secretary nominee Kipchumba Murkomen told Parliament that President William Ruto’s administration has inherited huge pending bills that will necessitate floating of a bond to offset the debts.
Mr Murkomen said the bond will be guaranteed by billions of shillings collected from motorists through the road maintenance levy and transit tolls. The State collects Sh18 per litre of petrol and diesel under the Roads Maintenance Levy Fund (RMLF) Act for road construction and rehabilitation.
The Kenya Roads Board (KRB) collected Sh87.4 billion comprising roads maintenance levy and transit tolls for development and maintenance of road network in Kenya in the year to June 2022.
“We have a big problem. We are inheriting Sh140 billion in infrastructure sector pending bills. We are unable to pay contractors because the money is not there. I think we bit more than we could chew,” Mr Murkomen said.
Mr Murkomen told a parliamentary vetting committee the government will use part of RMLF to guarantee the one-off roads bonds to raise funds to clear the mounting debts that have seen many contractors auctioned.
“We are proposing to securitise and use the roads maintenance levy funds to guarantee a one-off roads bond, payoff pending bills and complete stalled roads projects as we seek to achieve equity in the development of infrastructure across the country,” Mr Murkomen said.
The plan for a road bond will likely put the country on a collision course with the IMF which last year thwarted a similar plan to raise funds for the development and repair of the network.