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Govt calls on private sector to develop new roads

31 July 2014, 08:14

Nairobi - President Uhuru Kenyatta said Wednesday his government is willing to partner with local banks and listed companies to finance the construction of tarmac roads across the country.

Kenyatta said his government has finalized discussions with private financiers to develop 10,000 km of paved roads over the next three years.

"We have developed bold and imaginative strategies to finance infrastructure projects. Domestic resource mobilization will be key to achieve this goal," Kenyatta said at an infrastructure development forum in Nairobi.

The conference brought together policymakers, contractors and financiers to discuss alternative financing towards transport infrastructure.

Kenyatta said the government has developed policy and legislative tools to strengthen public private partnerships in development of new roads.

Kenyatta noted that budget shortfalls and graft have undermined the development of modern and durable paved roads.

"The government aims to develop 10,000 km of tarmac road in the next five years through the public-private sector financing model, " Kenyatta said, revealing that 2,000 km of small roads will be completed in the 2014/15 financial year.

Infrastructure Principal Secretary John Mosonik said the government will be seeking funding from banks and other private financiers under a new annuity model and will not depend on State funding.

He said the model not only allows faster completion of the projects but will see more flexibility in terms of payments of the loans by the government.

"The government has been funding most of these projects from the exchequer. Like for the last budget it was 1.13 billion U.S. dollars. The money will go to completing the already ongoing projects which will deliver 3,000 km, yet the government has committed itself to starting new projects," Mosonik said.

He said the government has already provided 34.3 million dollars to kick off the first phase of 2,000 km from December.

"The 2,000 km will be followed by 3,000 km and then 5,000 km. So by 2017, we will have actually rolled out these 10,000km," he added.

He said that the government will facilitate fund managers to channel resources towards roads construction. Infrastructure development underpins socioeconomic transformation in Kenya.

The rural roads will be 20 percent with the remaining 80 percent of the 10,000 km being in the urban areas. The ministry will also adapt another strategy where a contractor will design, construct and maintain the road which has not been the case before.

Mosonik by the introducing the aspect of maintenance, most of the contractors will be forced to ensure proper job, to avoid incurring extra costs later during maintenance.

"The contractors will guarantee construction quality and undertake post-construction maintenance of roads," he stressed.

Cabinet Secretary for Transport and Infrastructure, Michael Kamau said that the government will leverage private capital to expand road network.

"It is clear that both the public private partnership and annuity models will help us plug a funding gap of 54 million dollars for the roads sub-sector," said Kamau.

 - Xinhua

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