Over 40 major projects get the nod to seek private sector funds

A section of the Thika Super Highway. Photo| FILE  NATION MEDIA GROUP

In Summary

• The state faces a substantial gap between public investments needs and available resources, which can be can be plugged only by bringing together capital and know-how from public and private sectors

By JOSHUA MASINDE
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The government has approved 47 major infrastructure projects to be funded through partnerships with the private sector in a bid to seal a huge gap between public investments needs and available resources.

Faced with increasing financing pressure for both development and recurrent expenditure, which has heightened with the implementation of the devolved structure of governance, the government has had to turn to alternative sources of finances to carry out the projects.

“The government faces a substantial and expanding gap between public investments needs and available resources. The funding gap can be plugged only by bringing together capital and know-how from public and private sectors,” National Treasury cabinet secretary Henry Rotich said in a statement published in the press on Tuesday.

In the wake of a bloated recurrent expenditure, the government currently spends only about 30 per cent of the total budget on development programmes, starving the economy of much-needed incentives to drive growth.

The government would require between Sh172 billion ($2 billion) and Sh258 billion ($3 billion) annually in the next 10 years to meet the infrastructure financing shortfall it faces.

It is the weight of this financial burden that has forced the government to exploit opportunities created by the Public Private Partnership (PPP) Act enacted in February 2013 as a legal instrument guiding the engagement of the private sector in infrastructure development.

The Act provides for the participation of the private sector in the financing, construction, development, operation or maintenance of public infrastructure or development projects through concession or other contractual arrangements.

Both local and international private investors will be engaged in the development of multi-billion projects spanning roads, port and airport facilities, educational institutions, energy projects to water and irrigation projects.

Mr Rotich said the 47 projects have been subjected to a series of suitability tests and have received the Cabinet’s approval to proceed for development as PPPS.

Some of the key projects up for grabs in the public private partnership arrangement include the dualling of both the Mombasa-Nairobi and Nairobi-Nakuru highways, which will be constructed and expanded to dual carriageway in the partnership.

Operation and maintenance of a 40km section of the 8–12 lane Nairobi –Thika highway will be put in private sector hands, as will the 30km Nairobi Southern bypass.

The Jomo Kenyatta International Airport Terminal 2, which is to have an annual passenger capacity of 12 million, will be reorganised to accommodate private sector players in its development.

The private sector has also been roped in the development of 4340 megawatt power projects starting this year. This is in a bid to meet the 5000 megawatt target the government has set to achieve in the next four years.

Private sector investors will also be involved in the development of the proposed Sh2.5 trillion Lamu Port South Sudan Ethiopia Transport (Lapsset) project. The project components

The Nairobi Commuter Rail station, which has been hit by a funds shortage, is also on the radar. The project will involve rehabilitation of the existing 100 kilometre railway line and doubling some sections of the rail network.

It will also involve the design and provision of rolling sock and operation of a commuter rail link between Nairobi’s Central Business District (CBD) and the JKIA.

The proposed construction of a 3 – 4 star transit hotel with a 150 – 200 hotel room capacity at the JKIA has also been earmarked for private sector engagement. 

On the radar is also the proposed Mombasa International Convention Centre (MICC) to accommodate large events as Kenya turns to conference tourism as part of diversifying from the beach and safari.

The Kisumu Sea Port is also to be developed into a modern commercial port to accommodate the growing trade amongst the East African Community countries.

“The PPP programme in Kenya is being promoted as a long-term programme, and not as a series of independent projects,” said the National Treasury.

Last month, Principal Secretary for infrastructure in the ministry of transport and infrastructure, Eng. John Mosonik, said there had been a lot of intricacies involved in engaging the private sector in public infrastructure projects.

But, with the PPP law in place, the private sector will be involved in the development and management of infrastructure projects across the country.

“If you look at most of these projects, we are talking of billions in terms of development and maintenance and the government is not able to finance alone,” he said.

“The bottom-line is we need very good infrastructure in this country,” he added.