BIG FOUR CASH CRUNCH

State mulls private sector for Sh1.2 trillion projects

Jubilee unveils plan for 80 projects it wants delivered by private sector players as cash crisis bites

In Summary

• Yatani says Treasury will ensure mandatory evaluation of all proposed PPP projects for financial risks and contingent liabilities as a condition for approval. 

• Treasury adopted the PPP framework to beat the funding gap which is further threatened by the Sh6 trillion debt stress.  

James Gichuru-Rironi Road project.
AT STAKE? James Gichuru-Rironi Road project.
Image: COURTESY

Drying cash taps have forced President Uhuru Kenyatta to seek public-private partnerships to execute key infrastructure projects valued at Sh1.2 trillion.

In the works are about 80 projects, including toll roads, energy sector investments, schools, sea transport, water, agriculture, health and other trade facilitators.

Next year’s budget has a deficit of Sh653 billion, putting at stake various projects in the wider Big Four plan. 

The National Treasury adopted the PPP framework to beat the funding gap further threatened by the Sh6 trillion debt stress limiting borrowing. 

Already, procurement is ongoing for the second Nyali Bridge and the Nairobi-Nakuru-Mau Summit road, all of the toll roads.

Operation and maintenance of the Nairobi-Thika Superhighway, the Southern Bypass and the Nairobi-Mombasa Highway will be done under the PPP plan.

The projects are ready for tender, according to the government’s spending framework for 2020-21 tabled in Parliament on Thursday.

Works are already ongoing on the 90.5-kilometre Ngong-Kiserian-Isinya road and Kajido-Mashuru-Isara road.

Treasury revealed in the Draft 2020 Budget Policy Statement that project agreements have been signed for the 143-kilometre Modogashe-Habaswein-Wajir and El Wak-Rhamu-Mandera roads.

Agreements have also been signed for select urban roads totalling 45 kilometres in Nyeri, Kirinyaga, Murang'a, Embu, Tharaka Nithi and Laikipia counties. 

Select urban roads of 35 kilometres will also be worked on in Kakamega, Vihiga, Bungoma and Busia counties.

Agreements have also been signed for the 66.5-kilometre Illasit-Njukini-Taveta road and the Nairobi-JKIA-James Gichuru Road expressway.

President Kenyatta’s administration has also tendered for the construction and rehabilitation of various access roads totalling 233.3km.

These include Kilgoris-Lolgorian-Kehancha–Lolgorian road; Turbo-Shikhendu–Endebess-Kakamega–Ingotse–Namukoye-Nzoia River–Musikoma.

Others are the Ugunja-Ukwala–Ruambwa, Ruambwa-Port Victoria and Kimaeti-Malakisi-Lwakhakha roads through Njukini.

Contract negotiations with private parties are ongoing for the construction and rehabilitation of 71.5km roads. 

These will augment the existing roads from Bomas to Magadi; Bomas to Ruiru via Dagoreti and other link roads. 

In this lot is works for the 83.6-kilometre Nanyuki-Gwa Kungu and Laisamis as well as the 136-kilometre Ngurunit- Nursery (South Horr) road. 

Negotiations are also ongoing for the Kamiti-Roysambu-Kasarani-Mwiki roads, James Gichuru-Thika Bypass, Kajiado Bypass and Komarock Road. 

The same is the case for the Bomas-Kiserian-Magadi, Bomas-Karen-Dagoretti- Ruiru, Uplands-Githunguri-Ngewa-Ruiru totalling 71.46 kilometres. 

Project agreements have also been signed for the Likoni cable car project and for maintenance of the Shimoni Port, which is ready for tender. 

Conditions for funding are being addressed for various energy projects including the 1,050MW Lamu Coal Power plant.

Others are the 105MW Menengai Phase 1; the 35MW Sosian Menengai Geothermal Power; 35MW Quantum Menengai Geothermal Power and 35MW Orpower 22 Geothermal Power Plant project.

The government has already tendered for the 140MW geothermal PPP project at Olkaria while negotiations are on for Ormat Orpower Geothermal power plant.

Negotiations with private parties are ongoing for the maintenance of the first three berths at the Lamu Port and for the Lamu– Garissa- Isiolo highway.

The government has also tendered the 300-bed private hospital at KNH and is procuring transaction advisers (TA) for Pwani University Referral Hospital.

TAs are also sought for an amenity wing at the Kisii referral, cancer centre at Meru referral and upgrading of Nyamira Level 5 Hospital.

Kenyatta University will also benefit from student hostels under PPP while a request for proposals is out for hostels at Moi, South Eastern Kenya and Embu universities.

Hostel works at Egerton University and Kenya Technical Trainers College are ready for tender.

In the Tourism sector, a feasibility study has been completed for the Nairobi International Convention and Exhibition Centre.

There are also water projects ready for tender in Nanyuki, Murang'a and the Nakuru Integrated Solid Waste Management project.

Negotiations are ongoing with private parties for the construction of the Dongo Kundu and Naivasha special economic zones while a TA is being sought for the Muguga Agricity in Kiambu.

Project structuring for procurement is ongoing for an Export Quarantine Station and Livestock Export Zone in Kenanie, Machakos county. 

Condition for approval

Treasury boss Ukur Yatani says in the draft that the public sector’s contributions would be the use of multiple instruments of support and credit enhancement measures.

He said the policy on the issuance of government support measures which provides the structure and process of issuing the same is ready.

A PPP committee, established following the enactment of the PPP Act, 2013, seeks to use a management framework to ensure accountability of state funds put in the projects. 

The Fiscal Commitments and Contingent Liabilities (FCCL) Unit has been established under the Directorate of Public Debt Management within the National Treasury.

Yatani says the team would ensure mandatory evaluation of all proposed PPP projects for financial risks and contingent liabilities, as a condition for project approval. 

The FCCL unit will also be responsible for monitoring and evaluation of projects rolled out under the PPP arrangement.

“Currently, the government is in the process of strengthening the staffing levels of the FCCL Unit to make it fit for purpose,” the CS said.

All the support measures and other security instruments provided under the PPP plan will be integrated into the national debt management process.

The Treasury is banking on the PPP Project Facilitation Fund (PFF) – a revolving fund established under the PPP Act in June 2018, to steer the implementation. 

Edited by R.Wamochie