KENYA TO SET UP ROAD ANNUITY FUND

NAIROBI The Ministry of Transport will publish a list of roads in various parts of Kenya to be developed under a Public Private Partnership arrangement.

The ministry says that the programme, to be implemented under the road annuity financing model, will cover a total of 435 kilometres of roads.

It says the Cabinet has approved the establishment of five lots in phase 1 of the four-phase programme covering 10,000 km.

The Annuity Financing Model for road construction in Kenya was launched by President Uhuru Kenyatta in July 2014 with the objective of delivering high quality roads at minimal cost to the government.

Under this programme, Kenya expects to complete 2,000 km of small roads within the 2014/2015 fiscal year, followed by 3,000 km in 2015/2016 made up of 80 per cent small roads, and 20 per cent highways.

However, the cost of construction stalled the project after financiers and contractors quoted the cost of building one kilometre of road under the annuity model at two times more than the government’s budget.

The government also differed with the contractors on the interest rates payable where the government had proposed a uniform interest rate of 12 to 13 per cent to be charged on loans issued to shortlisted contractors.

The Cabinet has also approved the setting up of a Road Annuity Fund to help set aside a budget for the project.

Of Kenya’s 161,100 km of roads, only 14,100 km have been paved and the government is seeking to double this in five years through the annuity financing model

Source: KBC