KeNHA put to task over Sh26b pending bills

Kenya National Highways Authority acting Director-General David Muchilwa before the National Assembly Public Investments Committee. [David Njaaga, Standard]

The Kenya National Highways Authority (KeNHA) has Sh26 billion pending bills.

Acting Director-General David Muchilwa said the bills are interest accrued due to delayed payments to contractors who have been serving in the authority for more than 10 years.

Appearing before the National Assembly Public Investments Committee yesterday, the KeNHA boss said they are banking on a 10-year roads bond, the Roads Annuity Fund and the Public Private Partnership model to clear the bills.

He added that they plan to service the pending bills if they benefit from the fuel levy fund. The National Treasury increased the fuel levy from Sh12 per litre to Sh18 to cater for the Roads Annuity Fund.

The annuity constitutes a Sh6 per litre charged on motorists. It was, however, not clear how much KeNHA would benefit from the 10-year plan.

“I am not aware how much the Kenya Roads Board is planning to raise from the 10-year bond,” Mr Muchilwa said. He said they plan to use monies from the Kenya Road Board, public private partnership model and the roads annuity fund to clear the pending bills.

Muchilwa said the 10-year bond will meet part of the pending development bills and commitments of Sh26 billion as well as accrued interest of Sh6.4 billion as at end of June 2019.

“The Treasury developed a new model of project financing using proceeds from Road Annuity Fund and the Public Private Partnership,” he said. “We agree with the Auditor-General that KeNHA had a negative working capital of Sh26 billion as at June 2019.”

Muchilwa said the pending bills incurred due to contractors, consultants and Project Affected Persons that accrued due to insufficient budgetary allocation against KeNHA’s development requirement.

He said the deficit is also attributed to the Treasury’s budget reductions during the project implementation period. Auditor General Nancy Gathungu had flagged the deficit, saying KeNHA was operating with a Sh26 billion negative capital.

“In view of the unfavourable financial position, management may need to take measures to reverse the situation,” she said.