KeNHA tenders for consortium under road annuity program

The government   is seeking to procure a consortium with the capacity to secure funding to construct 233 kilometers of roads under phase 1 of the 10,000 road annuity program.

The Kenya National Highways Authority (KeNHA) says the move has been necessitated after the Ministry of Transport and Infrastructure identified the need to upgrade to paved standards approximately 3,000 kilometers of roads.

The government says the roads are intended to support the primary growth commerce, tourism, agriculture, and rural production and extractive industries.

In a gazette notice, the Transport Ministry has indicated that the approach under the program will be based on the Finance-Design-Build-Maintain Contact Framework.

The consortium will have to demonstrate capacity to finance, design, construct, manage and maintain the road once the project is complete.

The ministry says the program under the road annuity financing model will cover Kilgoris-Lolgorian road, Kehancha-Lolgorian road, Turbo-Sikhendu-Endebes road among others.

The Annuity Financing Model for road construction, under Public Private Partnership arrangement, was launched by President Uhuru Kenyatta in July 2014 with the objective of delivering high quality roads at minimal cost.

However, the cost of construction stalled the project after financiers and contractors quoted the cost of putting building a kilometer of road under the annuity model at twice the government’s initial budget.

The government also differed with the contractors on the interest rates payouts where the government had proposed a uniform interest rate of between 12 to 13 percent to be charged on loans issued to shortlisted contractors.

Through the proposed model, the consortium picked will have to raise the necessary funding for the project.

Of Kenya’s 161,100 kilometers of roads, only 14,100 kilometers have been paved and the government is seeking to double this in five years through the annuity financing model.