Puzzle of Sh47bn road funds returned to the Treasury
More than Sh47 billion meant for the construction of roads was returned to the National Treasury between 2016 and last year, despite the sorry state of infrastructure in many parts of the country.
The Road Annuity Fund, which was formed in 2016 to finance public-private partnership ventures, wired back the cash yet contractors have been abandoning projects across the country due to lack of funds.
The National Assembly Special Funds Committee Monday wondered why billions of shillings are channelled to the fund annually, yet they are not utilised in construction and maintenance of roads.
They were discussing the fund’s audit report with Infrastructure Principal Secretary Paul Maringa. The fund was created as an alternative financing mechanism to ease pressure at the exchequer.
It is managed under the Annuity Fund Regulations 2015 and is managed by a committee chaired by the National Treasury Principal Secretary. The accounting officer is, however, the Infrastructure PS.
Regulations amended
In 2019, the fund’s regulations were amended to allow surplus funds to finance other road projects procured outside the PPP. Following the amendment of the regulations, the PS said a number of projects had been identified and the works would start in May this year.
Some of the roads are Vihiga-Kakamega-Bungoma-Busia, Illasit-Rombo-Njukini-Taveta, Modogashe-Habaswein-Samatar and Rhamu-Mandera.
The fund was also expected to bridge the gap between the net government financing and the budget requests. But as of today, the fund only has the 48-km Ngong-Kiserian-Isinya and the 43-km Kajiado-Imaroro roads to show for its existence.
Migori Woman Rep Denitah Ghati asked the criteria used by the committee to settle on roads to be financed by the kitty. “Is it that from 2016, only one project has been completed using this fund? I don’t understand it at all,” she wondered.
Yet to take off
Committee chairman Kathuri Murungi (Imenti South) said some projects, including those commissioned by President Kenyatta, are yet to take off because contractors have not been paid.
“The contractors are saying they have never been paid and cannot go to the site to continue with work,” he said. The lawmakers also took issue with the high interest rates Kenyans are paying back the contractors under the model.
It emerged that in one of the projects set to start in May, the contractors will only use Sh18 billion but Kenyans will pay back Sh53 billion.
“We need the information well explained in a spreadsheet on what the contractors are putting in and what Kenyans are paying back. These roads are way too expensive. Are we getting value for money through this model? This country is already in debts that we are almost being mortgaged,” Mr Murungi said.
Ainabkoi MP William Chepkut said the contractors under the model are robbing Kenyans in form of interest rates.
Endebes MP Robert Pukose told the ministry to be cautious about the financial model of the projects so that the country is not held hostage by contractors.
“We should go for cheaper loans in the World Bank instead of going to commercial banks, which are charging high interest rates,” Dr Pukose said.
Delays in projects actualisation
The PS, however, told MPs there have been delays in actualisation of projects since it’s a new concept and many contractors and financiers were not ready to come on board. That meant the fund accumulated more money, which was returned to the National Treasury.
“Owing to the slow take off, the fund had accumulated cash in excess of the planned absorption,” Prof Maringa said.
He said the Sh47 billion sent back to Treasury was meant to pay pending bills of various road projects.
He, however, failed to provide details of the specific pending bills the money was used to pay. He was given a week to provide a detailed report on how the money was used. BY DAILY NATION
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