CS Chirchir defends Sh175bn infrastructure bond deal, assure won’t impact public debt

Transport CS Davis Chirchir has confirmed that the State Department for Roads allocated funds from the Road Maintenance Levy Fund (RMLF) to a Special Purpose Vehicle (SPV) in February 2025. 

This, he said, was part of a financing arrangement to secure a Sh175 billion long-term infrastructure bond facility from the Trade and Development Bank (TDB).

Appearing before the National Assembly's Budget and Appropriations Committee on Friday, Chirchir said the funds were intended to settle pending bills and other financial obligations at the State Department for Roads.

He affirmed that the government did not issue any sovereign guarantee for the transaction, and thus, the deal does not affect the country’s public debt ceiling or fiscal sustainability.

“No guarantee has been issued by the government of Kenya for this transaction. The risks associated with the transaction rest with the purchaser of the receivables, that is, the SPV,” he said.

“The transaction does not sit in the books of the government, but in a bankruptcy-remote SPV. Therefore, it does not imply public debt ceilings and fiscal sustainability.”

The session, chaired by Samuel Atandi (Alego Usonga), also addressed other pressing issues in the transport and infrastructure docket.

A significant focus was on the contentious management and allocation of the Road Maintenance Levy Fund.

While offering his perspective on the County Governments Additional Allocation Bill, 2025, Chirchir noted that the proposed Sh13.115 billion conditional grant to counties for the 2025/26 financial year exceeds projected allocations.

“This is because historically, counties have received 15 per cent of the RMLF, and the projection for this financial year is Sh82.355 billion. Therefore, the funding should be Sh12.353 billion and not Sh13.115 billion,” he said.

“It should, however, be noted that the Printed Estimates for FY 2025/26 have made no provisions for RMLF allocations to county governments.”

The CS urged Parliament to fast-track the Kenya Roads (Amendment) Bill, 2025.

He said the legislation is critical in clarifying road classifications, delineating responsibilities between national and county governments, and guiding the allocation of resources accordingly.

The Budget and Appropriations Committee has concluded its stakeholder engagements for the week and is finalising reports on the Budget Implementation for the Financial Year 2024/25.

This is alongside two Senate bills—the County Governments Additional Allocation Bill, 2025, and the Equalisation Appropriation Bill, 2025.

These reports are expected to be tabled once the National Assembly resumes from recess.