The Treasury has stepped in to pay Sh13 billion for the upgrade of the 26km James Gichuru-Rironi Road, a key artery of the Nairobi-Nakuru highway, after the World Bank pulled out of the project.
The multilateral lender cancelled its share of the funding for the Sh16.3 billion upgrade of the project due to delays.
The Kenya National Highway Authority (KenHa) Monday said the World Bank is no longer part of the road’s expansion. Construction work is progressing slowly due to the need for additional billions to compensate investors ceding land for the works.
The cancellation came as the Treasury was seeking to negotiate afresh with the World Bank for Sh10 billion funding to cater for the additional unplanned land compensation claims.
“Every programme that World Bank funds through the National Urban Transport and Improvement project has a timeline, and in this case, the timeline for funding of this road was to end in December 2019,” KenHa director-general Peter Mundinia said Monday.
“It is the reason why they (World Bank) could not fund the road as timeline had elapsed. Treasury therefore thought it wise to terminate the agreement and fund the road through locally generated resources.”
The World Bank — which for the first time in May agreed to offer Kenya budgetary support worth Sh75 billion — said it will respond today.
The Sh75 billion loan ($750 million) will be the first time in years the World Bank is putting cash straight into the Treasury to be used at the discretion of the Government.
The bank has in the past preferred to fund specific projects.
Under the James Gichuru-Rironi Road project, the World Bank was to offer Kenya 80 per cent of the total upgrade cost of Sh16.3 billion or Sh13 billion. Kenya was responsible for the remaining Sh3.3 billion or 20 per cent of the project cost.
KenHa say 67 per cent of the project time has lapsed while only a quarter of the work had been completed by August 15.
Transport and Infrastructure Secretary James Macharia told Parliament in June of the negotiations with the World Bank for the Sh10 billion.
Under its policy, the World Bank never provides funds for compensation or land acquisition where it finances a project.
But Mr Macharia told MPs that his ministry had pleaded with the financier to reconsider the position because the project was special due to the amount involved.
Mr Mundinia said the cost of compensation had escalated beyond the reach of the agency due to the huge variation in the valuation of the land along the corridor between the consultant it had recruited and the National Land Commission (NLC).
While the consultant valued an acre of land at Sh900,000, the NLC valuation stood at Sh30 million, which had significantly pushed up the cost of compensation.
The project is part of the Sh59 billion KenHa plan to improve the thoroughfare from Jomo Kenyatta International Airport to ease traffic congestion in Nairobi.