Oct 21, 2021

Mawazo Writing Africa

Writing about the main

Kenya faces $1.4billion penalty forroad toll breaches

Kenya risks Ksh 158.8 billion ($ 1.4 billion) in damages if it terminates contracts with private companies that have built roads and solar power plants under the new public-private partnership models .

Disclosures from the National Treasury Department on seven projects that are either operational or ongoing shows that Kenya has spent $ 1.4 billion on early termination of PPPs due to sovereign default would pay.

These projects include the Nairobi Expressway, owned by China Road, and Bridge Corporation (CRBC), roads and power plants.

Kenya is keen to keep the pace of spending on new infrastructure with Maintain funding from private donors while reducing borrowing and budget deficit.

Retail investors will earn anywhere from 10 to 30 years from charging user fees such as tolls, but analysts say such F. funding has often stumbled upon government guarantees and revenue-sharing agreements.

“The contingent liability estimate for PPPs is based on a worst-case scenario, i.e. early termination of the PPP contract due to state failure”, the Treasury Department said.

“Below are estimates of the total maximum termination payments per sector ($ 510.9 million) in the energy sector and 926.7 million. The Treasury Department has not broken down how many penalty taxpayers are for each Infrastructure projects have to pay.

The PPP model was considered as an alternative to financing expensive infrastructure projects outside the limited state budget.

President Mwai Kibaki established the Public Private Partnership (PPP ) Act approved, but the use of private capital to build the infrastructure has not caught on.

The government turns to PPP -Deals to make room for additional tightening of borrowing.

Over the past seven years, the government has taken out extensive loans to invest in infrastructure, bringing the national debt to Ksh 1.77 trillion Billion US dollars) more than quadrupled to 7 Ksh in February 2013. 9 trillion ($ 71.4 billion) at the end of last week.

This sharp rise in national debt, which is now up to 73 percent of gross domestic product (GDP), has limited funding opportunities for further infrastructure investments. < / p>

The Treasury Department says the government has identified a number of the priority sectors for PPP development, including ports, roads, rail, power transmission, health, housing, water and sewage, and the blue economy.

< p> Currently the seven projects including the Nairobi Expressway, Ngong-Kiserian- Isinya Annuity Road, Malindi Solar, Alten Solar, Cedate Solar Power, Chania Green and Selenkei SolarPower have been approved by the PPP Committee.

Construction is underway on the 27-kilometer Nairobi Ksh73 billion ($ 660.3 million) expressway that will run from Jomo Kenyatta International Airport (JKIA) to James Gichuru Junction on Waiyaki Way.

The Ken ya Rural Roads Authority (KeRRA) also used the PPP model as part of the road pension program. for the construction of the 91-kilometer-long Ngong-Kiserian-Isinya road to Mashuru-Isara will be expanded to cope with the increased traffic along the busy corridor. The state has been accused of failing to fully disclose the PPP deals.

A parliamentary expert opinion on economic affairs has warned that inadequate disclosure of the tolls on the Nairobi Expressway could lead to public opposition, potentially causing a shock The government plans to have the Chinese contractor reimburse the cost of tolls for motorists using the road.