Infrastructure Principal Secretary Paul Maringa told Parliament that part of the proceeds will be used to settle pending bills covering the period up to June 30.
The PS told the team that the roads sub sector requires about Sh650 billion to clear all outstanding commitments on ongoing projects.
The Treasury will issue the first ever roads bond worth Sh150 billion by June that will go towards rehabilitation of dilapidated network across the country.
Infrastructure Principal Secretary Paul Maringa told Parliament that part of the proceeds will be used to settle pending bills covering the period up to June 30.
“The balance is expected to finance works from July 1 to September 30 when the second bond is expected to be issued,” Prof Maringa said.
The timings for the flotation and structure of the second bond will be guided by the Treasury, he added.
He spoke when he appeared before National Assembly’s Transport and Infrastructure committee which was scrutinising infrastructure spending plans as contained in the 2020/21 Budget Policy Statement.
The PS told the team that the roads sub sector requires about Sh650 billion to clear all outstanding commitments on ongoing projects.
“This implies that it will take over 10 years to pay off the current outstanding commitments, assuming no new projects are brought on board,” Prof Maringa told the committee chaired by Pokot South MP David Pkosing.
The government has empowered the Kenya Roads Board (KRB) to borrow funds from commercial lenders leveraged by annual parliamentary appropriations under the development budget.
“The net government capital project allocation under Kenya National Highways Authority (KeNHA), Kenya Rural Roads Authority (KeRRA) and Kenya Urban Roads Authority (Kura) will be collapsed into one-line transfer to KRB in the 2020/21 budget.
As such a Sh51.8 billion allocation, initially set at Sh65 billion, for the three road agencies in the coming budget will also be channelled towards repayment of the roads bond.
The committee had demanded to know why the allocations had been cut.
“Somebody at the Treasury is being mischievous for reducing the budget simply because KRB has power to float a roads bond. If you don’t ensure that the allocations of Sh65 billion is ring-fenced for 10 years, KRB will be mortgaged because it will not have cash to service the bonds,” Mr Pkosing said.
The team directed Prof Maringa to discontinue the Sh37 billion road annuity programme and channel the money through the roads bond.
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