The government is planning to raise Ksh 175 billion through the bond market to clear pending bills that have led to stalling of various road projects across the country.
Roads and Transport Cabinet Secretary Davis Chirchir says the bond which will be floated within the next 90 days will target both domestic and eternal bond markets.
In the meantime, Chirchir says the government has secured Ksh 74 billion bridge facility from Trade Development Bank and Afreximbank through a Special Purpose Vehicle (SPV) to begin immediate payment to contractors under a structured settlement agreement in order to facilitate commencement of stalled road projects across the country.
“We are paying them today 40pc of what we owe them through the bridge facility and we expect them to go back to work on all the roads where there are those contracts. We that would shortly be seeing all the road contractors back to work. The first bridge facility of about Ksh 74 billion is basically done. We have received Ksh 63b today and through a structured settlement agreement which is a return to work formula,” said Chirchir.
According to Chirchir, the loan which has attracted an interest of 7.8pc for a period of two years is expected to be cleared with proceeds from the infrastructure bond which will be floated on both the domestic and the international market. 80pc of the funds will be raised on the external bond market with the balance from the domestic market.
For both the bridge facility and the bond, Chirchir says the government will use the Ksh 7 shillings added on the Roads Maintenance Levy Fund (RMLF) in July last year as security.
“What we have done with the approval of Parliament giving us the additional Ksh 7 of the roads maintenance levy on top of the current Ksh 18 sometimes in July last year was to take a bold decision to securitize the Ksh 7 to raise about Ksh 175 billion through a bond issuance but we have structured it with the bridge facility that brings in a loan facility quickly to be able to pay the contractors, get them back to work and get work on all these roads starting again,” added Chirchir.
Chirchir says out of the Ksh 55 billion which was appropriated to clear pending bills by the excheuers, only Ksh 35 billion has been paid.
According to projections by the Kenya Roads Board (KRB), the annual RMLF revenue will increase to Ksh 115 billion from the Ksh 25 being charged on petrol and diesel.
Ronald Owili
