In Summary
  • High costs sees the government turn to the older Engineering, Construction and Procurement.

  • The 10,000 kilometre road project, which was set for implementation in the next five years, was projected to cost the taxpayer Sh260 billion.

  • Under Engineering, Construction and Procurement (EPC), Mr Macharia said, road set up costs were lower at an average of Sh30 million per kilometre.

  • “We have changed the focus from highways, urban roads to a lot more on rural areas. The Gross Domestic Product is very low there, so if we invest in those areas, the impact will be substantial. Out of the 10,000 kilometres, which was the target, 80 per cent will be rural,” said acting Transport Cabinet Secretary James Macharia.

The much hyped annuity road financing plan has been ditched over concerns of inflated costs, in favour of an older, cheaper construction model.

Acting Transport Cabinet Secretary James Macharia told the Nation Monday that the decision to turn to the older model — Engineering, Construction and Procurement (EPC) — was arrived at after realising that accumulated costs per kilometre would average a staggering Sh300 million under the annuity programme.

The 10,000 kilometre road project, which was set for implementation in the next five years, was projected to cost the taxpayer Sh260 billion.

Under EPC, Mr Macharia said, road set up costs were lower at an average of Sh30 million per kilometre.

GOVERNMENT FLEXIBILITY

“The bids were too high (for the annuity programme). The average costs of building a road per kilometre came to more than Sh300 million. We realised that we cannot do much as a country if we go that route. We said we needed to change the concept from pure annuity programme to the old model of Engineering Procurement and Construction,” he said at his office.

The government would, however, remain open to the annuity model should the bidders climb down from their expensive quotes that were attributed to the risks associated with the project by banks.

Under the annuity plan, the government would have negotiated uniform loans from banks while the contractors would design, build and maintain the roads.

RURAL ROADS

Mr Macharia said the government would also shift focus to rural areas where the cost of building roads “is a lot less, but impact is very high.”

“We have changed the focus from highways, urban roads to a lot more on rural areas. The Gross Domestic Product is very low there, so if we invest in those areas, the impact will be substantial. Out of the 10,000 kilometres, which was the target, 80 per cent will be rural,” said Mr Macharia.

BIDS

Consequently, his ministry would award bids for the construction of the first 3,600km network by the first quarter of 2016.

“Already the first batch is out and we will send it to potential bidders. It will cover about 1,700 kilometres, while the second batch to be evaluated in November will cover 1,800 kilometres. By the end of the year, we shall be talking about programmes which will be running to about 3,600 kilometres,” said the CS.

While announcing the annuity programme last year, the government sought to enlist the private sector in construction of roads in a massive turnaround of the country’s infrastructure network.