Fifty-seven key infrastructure projects will be financed under the Private Public Partnership (PPP), the Government has revealed.
National Treasury Cabinet Secretary Henry Rotich says the Government is keen to tap on the private sector to bridge the infrastructure financing deficit after the successful development of the PPP legal framework.
In an interview in Mombasa on Friday, Mr Rotich signalled that the Government may now borrow in the domestic market despite earlier indications that it planned to cut its domestic borrowing to stimulate economic growth.
"We have a huge infrastructure deficit and it is important that we fill it. The demand for the infrastructure and especially better roads is very high mainly because of economic growth both in the country and our neighbours," he said.
He said the Government was exploring ways to finance infrastructural projects including through PPP, domestic and international borrowing and an increase in budgetary allocations.
The CS said the Governments will build 10,000km of road network in an ambitious infrastructure expansion programme mooted last year through annuity financing.
Annuity financing model allows contractors to access loans guaranteed by the Government from banks for designing, construction and maintaining the roads.
Coal plant
"The demand for infrastructure in Kenya ranges from better roads, Mombasa port expansion to make it efficient, airports, railways to the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) corridor project. All these need huge capital and you may be aware we have huge financing gaps," he added.
The country's annual infrastructure budgetary deficit currently stands at USD2 billion.
Rotich cited the construction of a Sh164 billion coal plant in Lamu under the PPP as testimony on how the Government and private sector can team up to finance key projects.
The 960 megawatt project is being undertaken by Centum, Gulf Energy and another Kenyan firm.
He said that demand for better and efficient infrastructure had increased owing to economic growth in East Africa and given Kenya's strategic position as the gateway into the region.
The CS said that the government was also looking at financing roads construction under the annuity.
"Lamu coal plant will be constructed under the PPP arrangement and on the road sector we are doing through annuity another 10,000km of road," said Rotich after the signing of a Sh25 billion loan from the Japanese government for the construction of a terminal at the Port of Mombasa.
He said that the Government will also continue relying on support from the development partners.
The Government, Rotich added, is also banking on support from the World Bank, African Development Bank and the European Union for finances to develop infrastructure.
He exuded confidence that development partners will continue to support the infrastructure projects in the country, considering that the Government has never failed to service its loans.
