The Treasury will float a third road bond of Sh75 billion by end of June, whose proceeds will be used to pay contractors and rehabilitate dilapidated network across the country.
The National Assembly has directed the Treasury to issue the bond by end of the current financial year to raise the money from private investors.
The Treasury will float a third road bond of Sh75 billion by end of June, whose proceeds will be used to pay contractors and rehabilitate dilapidated network across the country.
The National Assembly has directed the Treasury to issue the bond by end of the current financial year to raise the money from private investors.
“The committee recommends an increase of Sh75 billion to the State department of Infrastructure to be financed through a road bond to be floated by the National Treasury,” Mr Kanini Kega, who chairs the Budget and Appropriations Committee (BAC) said in a report on the Budget Policy Statement 2021.
The committee said the State Department for Infrastructure ha Sh75 billion in accumulated pending bills as at December 2020.
“…this (pending bills) is projected to increase to Sh85 billion by end of the current financial year,” BAC said in the report that reorganised the 2021/22 budget as proposed by the Treasury Budget Policy Statement.
Infrastructure Principal Secretary Paul Maringa told Parliament earlier that the roads sub sector requires about Sh650 billion to clear all outstanding commitments on ongoing projects.
Parliament in 2019 enacted the Kenya Roads Board Act which gave the Kenya Roads Board (KRB) the power to borrow and leverage the Kenya Roads Fund to seek funds for roads maintenance.
Bond issuance to source for funds for maintaining roads is a long break from the traditional road toll and fuel levy approach where KRB would disburse the fund to road agencies and county governments every year to keep roads in good shape.
The move was made possible after a legal framework was completed by MPs to enable the floating of such debt instruments.
Last September, KRB announced plans to issue a second Sh30 billion roads bond to source funds for maintenance which has been lagging for decades due to insufficient funding.
The 10-year bond was to be backed by the close to Sh70 billion collected from motorists through the Roads Maintenance Levy Fund.
This will make it the first bond to be backed by the levy charged at Sh18 per litre of fuel at the pump.
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