State bets on road projects to spur economic growth

Transport and Infrastructure Principal Secretary John Mosonik (left) inspects repair works of the 18km Mwatate-Wundanyi road on June 12, 2015. He Mosonik brokered an agreement between the National Land Commission and the Mombasa County Government to save the Sh327 billion standard gauge railway project. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP

What you need to know:

  • Under the plan, 2,000km would have been tarmacked by last Thursday when the Budget was read. However, the programme has fallen behind schedule due to logistics challenges.
  • Transport infrastructure was listed second in the six areas identified as critical in the budget’s strategies under the five-pillar transformation programme.
  • Kenyans consumed 3.1 billion litres of diesel and petrol in the fiscal year ended June 2014, which saw collections from the fuel levy hit Sh28 billion.

The government is banking on transport infrastructure projects to speed up economic growth by creating jobs and improving the business environment.

In the Budget read on Thursday, the Treasury sought to breathe life into the cash-strapped road maintenance and expansion programmes that have slipped into low gear.

Of the Sh132.2 billion allocated for maintenance and completion of ongoing road projects, Sh5 billion is for the Road Annuity Programme that seeks to tarmac 10,000km road through public-private partnership.

Under the plan, 2,000km would have been tarmacked by last Thursday when the Budget was read. However, the programme has fallen behind schedule due to logistics challenges.

Infrastructure Principal Secretary John Mosonik, however, has defended the annuity project saying it is on track despite delays in the award of tenders for the first phase.

ANNUITY ROADS

“We have 620km of road tenders ready and the Cabinet will approve them next week after which we will head straight to award (tenders).

A further 2,100km of the roads are already packaged to be sent to the Public-Private Partnership for evaluation next week and I am sure we shall roll out the first annuity roads in August,” Mr Mosonik told Smart Company.

The PS said there will be a series of launches after August for road projects under the second and the third phases adding that awarding of tenders for the projects will start soon.

In the budget estimates, the department for infrastructure has outlined plans to construct 350km of new roads through the usual budgetary allocation and 3,000km under the annuity programme.

Although the Kenya Roads Board (KRB) had proposed doubling of the petroleum levy in a move that could have significantly increased the cost of transport, the government raised the levy by Sh3 per litre in order to get more funds for road maintenance.

KRB, which collects and manages Kenya’s road maintenance levy, said the charge imposed in 2006 had been overtaken by high prices of raw materials and labour as well as transportation costs. The plan to tarmac 10,000km of roads was also cited as another reason to seek more funds for maintenance.

FUEL LEVY
Kenyans consumed 3.1 billion litres of diesel and petrol in the fiscal year ended June 2014, which saw collections from the fuel levy hit Sh28 billion. With the rise in motor vehicles in the past year, the levy is likely to net close to Sh40 billion to maintain the 47,896km of roads in the 2015/2016 budget.

Apart from the funds allocated to rehabilitate 234km of roads, Sh53.5 billion were set aside to finance 3,000km of ongoing projects.

“By 2017, we are expecting to have 8,000km of ongoing projects ready and because phase two will move even faster as we shall have gained the experience needed under this funding scheme,” Mr Mosonik said adding that there are many other road projects going on apart from those under the annuity plan.

Unspecified amounts from the allocated funds will be spent on training of contractors and road overseers; enhancing monitoring and evaluation of the department’s major projects; and promoting research on affordable road construction materials and methods.

Transport infrastructure was listed second in the six areas identified as critical in the budget’s strategies under the five-pillar transformation programme.

The standard gauge railway was singled out as vital in cutting transport cost by about 70 per cent, facilitating faster and cheaper movement of freight and passengers and enhancing competitiveness of the economy.

RAILWAY LEVY

“The construction of the railway started in early 2015 and is expected to be completed around mid-2017. To facilitate the speedy implementation of this project, I have proposed additional allocation to the Kenya Railways Corporation Sh118.2 billion for standard gauge railway financed by a loan from China and Sh25.7 billion to be funded from the railway development levy fund,” Mr Rotich said when reading the budget.

“The construction of Phase II of the modern railway from Nairobi to the shores of Lake Victoria (at the port with the shortest access to East Africa) will start this financial year under design and build framework.”

Upgrading of existing railway lines (Nairobi to Malaba, Nakuru to Kisumu, Nairobi to Nanyuki, Voi to Taveta among others) is also planned to begin in the course of 2015//16 financial year and is expected to be completed within three years.