The construction of rural roads under the State’s annuity programme is set to start soon, even as Kenya awaits the World Bank financing.
Transport secretary James Macharia told Parliament that the ministry was working on contracts for roads in five lots which have been identified as requiring immediate attention.
The country has been banking on a Sh150 billion concessionary loan from the World Bank (WB) to speed up financing of the programme which has been rocked by high cost of borrowing from banks.
Last year, the National Treasury set aside Sh9 billion under a special purpose fund to finance and upgrade selected rural roads to bitumen standards.
“We have said that lets start the programme with the little money we have as we wait for the other funding to come,” said Mr Macharia.
He told the National Assembly Transport committee that the Sh9 billion in the annuity levy was enough to maintain road works in the five identified lots.
The fund was set aside to assure road developers including contractors and financiers that the government’s annuity payment obligations will be met when they fall due.
It was aimed at addressing fears that pending bills will accumulate with respect to payment demands under the new mode of financing roads development.
Roads identified under the five lots are in Ngong, Kiserian, Njukimi, Taveta, Kwale, Kinango, Mariakani, Lamu, Mandera, Elwak and Wajir among other places.
Under the annuity financing model, local contractors are expected to build a selected number of roads using their own resources and later recover the money from the Treasury.
There has been an air of uncertainty about the viability of the programme after commercial banks refused to fund the project termed as one of the key milestones of the ruling Jubilee administration.
Local banks had snubbed a government proposal to charge contractors a uniform interest rate arguing that they were borrowers like any other, and that the rates take into consideration their individual risk profiles.
“We have decided to go back to the contractors and negotiate with them on the lowest possible cost,” said Mr Macharia.
Complications emerged after contractors submitted bids with some quoting three times the actual costing, which the government considered too expensive.
President Uhuru Kenyatta launched the Annuity Financing Model for road construction in Kenya in July 2014 with the objective of delivering high quality roads at minimal cost.
Under the State’s annuity roads financing plan, at least 10,000 kilometres of roads across the country will be built in a Public Private Partnership (PPP) model over 10 years.