The government of Kenya through the Treasury has announced that it is set to issue its first ever roads bond worth US $1.5bn that will go towards rehabilitation of dilapidated road network across the country. Infrastructure Principal Secretary Paul Maringa told Parliament revealed the report and said the bond will be issued by June this year. He explained that that part of the proceeds will be used to settle pending bills covering the period up to June 30.
The balance is expected to finance works from July 1 to September 30 followed by issuance of a second bond. The timings for the flotation and structure of the second bond will be guided by the Treasury. The PS also noted that the roads sub sector requires about US $6.4bn to clear all outstanding commitments on ongoing projects.
“The government has empowered the Kenya Roads Board (KRB) to borrow funds from commercial lenders leveraged by annual parliamentary appropriations under the development budget. It will take over 10 years to pay off the current outstanding commitments, assuming no new projects are brought on board,” said Prof Maringa.
“The net government capital project allocation under Kenya National Highways Authority (KeNHA), Kenya Rural Roads Authority (KeRRA) and Kenya Urban Roads Authority (Kura) will be collapsed into one-line transfer to KRB in the 2020/21 budget. As such a US $513m allocation, initially set at US $644m, for the three road agencies in the coming budget will also be channeled towards repayment of the roads bond. In addition, the US $367m road annuity programme will be discontinued and the funds also channeled through the roads bond,” he added.