The government owes road contractors and landowners Sh145 billion in pending bills for certified works, adding to the working capital uncertainty for companies and timely delivery of ongoing projects around the country.
Transport Cabinet secretary Kipchumba Murkomen told Parliament on Wednesday that out of these pending bills, local contractors are owed Sh50 billion while foreign firms have not been paid Sh60 billion.
The balance of Sh35 billion is owed to landowners whose properties were acquired for road construction.
“The Ministry of Roads had an ongoing roads portfolio of over 800 projects with a total outstanding cost of Sh763 billion as of February 28, 2023,” Mr Murkomen told MPs.
“Out of the outstanding pending bill, an amount of Sh145 billion is related to certified works not yet paid. This is the pending bills.”
While responding to questions from MPs on the floor of the House, Mr Murkomen said most pending projects are either undergoing slow implementation or have completely stopped as a result of the government’s failure to provide resources to pay contractors.
He said most road projects had stalled for more than five years while nine have been abandoned for a period longer than 10 years.
“We have negotiated with the Roads Annuity Fund, which has agreed to release Sh12 billion to us to pay some contractors,” he said.
“I thank contractors and a number of banks that we have talked to and agreed to allow us to look for money. Some of these contractors could have been auctioned. This situation is unfortunately inherited.”
The Cabinet secretary added that the amounts that the Treasury disbursed to the Roads Ministry were spread among contractors and subcontractors for them to go back to work and that no new road projects would be started before the ongoing or incomplete works are finalised.
When he appeared for vetting last year, Mr Murkomen told MPs that the government would consider floating a roads bond to pay pending bills, guaranteed by funds 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 Act for road construction and rehabilitation.
The Kenya Roads Board collected Sh87.4 billion comprising roads maintenance levy and transit tolls for the development and maintenance of the road network in Kenya in the year to June 2022.
By the end of June 2022, the government’s pending bills had climbed to Sh504.7 billion, a 40.39 percent jump from Sh359.5 billion the previous year.
In his inauguration speech, President William Ruto promised to prioritise the settlement of pending dues passed down by the outgoing administration, giving businesses hope of improved cash flows.