Under the new financing model christened annuity financing framework, a contractor who wins a road construction bid will be required to design and raise funds for the project. The contractor will also be required to maintain the road for between five and eight years.
The government, which plans to build a 10,000km road network in the next three years, will periodically provide 30 per cent of the funds, with the balance financed by commercial banks with repayment done over 10 years.
The new financing model is aimed at improving efficiency among local contractors while ensuring availability of funds to prevent time and cost overruns that have been experienced in the past.
“The financing models are being completed and the contractors are expected to be on site by end of March when the construction is scheduled to start,” Infrastructure PS John Mosonik said last week.
Under this programme, 2,000km of small roads will be built this fiscal year. In the 2015/2016 year, 3,000km made up of 80 per cent small roads and 20 per cent highways will be completed, whereas in the 2016/2017 year 5,000km, 80 per cent of which will be small roads and 20 per cent highways, will be delivered.
Pre-qualification of contractors, which closed on August 29, 2014, attracted more than 147 bidders – of which 49 contractors were pre-qualified to undertake the first phase of the the project.
The project is being undertaken jointly by the Kenya Urban Roads Authority, Kenya National Highways Authority and Kenya Rural Roads Authority.
Kenya has only managed to pave 14,000km of roads in 50 years of independence.