Kenya risks penalties and interest charges over Sh3.6 billion delayed payments to a Chinese contractor and landowners displaced by Nairobi’s Southern bypass project.
Auditor-General Nancy Gathungu said the State has delayed in remitting Sh1.2 billion to China Road and Bridges Corporation (CRBC) for setting up the 28.6-kilometre road, which links Nairobi and Kiambu counties via Langata and Kikuyu suburbs.
The Treasury has also delayed Sh2.4 billion compensation to landowners displaced from the project corridor.
The government has already spent Sh21.5 billion on the road having paid the Chinese contractor Sh19.4 billion and landowners Sh2.1 billion before falling back after the road was completed.
Kenya’s road sector is notorious for late payments that have amassed billions of shillings owed to private contractors and landowners.
“Other important disclosures reflect a figure of Sh3.6 billion relating to pending bills accounts. An increase of Sh756 million from the Sh2.9 billion outstanding at June 2020,” the auditor general said.
Land compensation
“Although management has committed to liaise with the line ministry and the National Treasury for adequate budgetary allocation and timely exchequer releases for prompt payments in the subsequent financial year, the project is at risk of incurring additional costs by way of interest and penalties with continued delay of making payments,” said the auditor-general.
Kenya was supposed to pay Sh4.6 billion in land compensation for the road that branches from Mombasa Road, through the National Park, past Langata, Ngong Road, Motoine river, Dagoretti, Thogoto road, over River Ondiri and Rialway line towards Kikuyu town.
However, the government has only paid Sh2.1 billion to landowners. Payments to CRBC dating back to 2014 have also been delayed.
The Southern Bypass is among key roads where the State plans to introduce toll charges to offset the cost of construction and maintenance. Kenya plans to construct several key highways through public-private partnership (PPP) model including the 243-kilometre Nairobi-Nakuru-Mau Summit road where motorists will pay to use the route.
The State in November last year published the Public Finance Management (National Road Toll Fund) Regulations 2021 that seek to establish the National Roads Toll Fund and legalise implementation.
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