Twenty six road projects had their prices inflated by agencies

 
The Kenya National Highways Authority (KeNHA) and other road agencies in Kenya are under fire for overseeing cost overruns for at least twenty six road projects and exceeding their budgets by more than KSh20 billion, which has caused a rise in unpaid bills.
According to a Business Daily review of official data from the Transport Ministry, at least twenty six infrastructure projects experienced cost overruns between 2007 and 2017.
Even if the law permits some price changes, the fact that a sizable portion of the projects exceeded their budgets raises concerns about the quality of budgeting, as this indicates that they failed to meet the criterion that projects should be finished on time, within budget, and within scope.
These price increases have resulted in an accumulation of unpaid invoices, which are now anticipated to total KSh145 billion for the road projects alone. By the end of June, this constituted one-fourth of all pending bills for the government.
According to a study of the data from the Transport Ministry that has been posted on the Treasury’s website, the total cost of these projects was initially estimated to be KSh682.67 billion.
When the projects were finally finished, however, the overall cost soared to KSh703.19 billion, exceeding the budget by KSh21 billion.
The abrupt increase in land acquisition costs, changes to the project’s scope, and inflation when a project takes a long time to finish have all been blamed for project inflation.
All other public projects evaluated are roads, with the exception of a bridge and the standard gauge railway (SGR), the most expensive project in the nation.
The majority of these projects were funded by the KeNHA, a governmental organization whose primary duty is to manage, build, restore, and maintain Class S, A, and B roads.
The Kenya Urban Roads Authority (KURA), the other significant procurement body, saw it’s Outer Ring road included on the list of contracts whose budget exceeded its initial estimated cost by KSh3.64 billion.
Kura’s first estimate of the road’s overall cost was KSh9.89 billion. However, the road’s budget had increased to KSh13.53 billion by the end of June of last year.
“During the implementation of the project, there was an increase in the project cost due to relocation of services and land compensation costs which were part of the estimated overall project cost during the conceptualisation and funding formulation,” said KURA.
The additional cost, Kura noted, would be drawn from the government’s revenue as “the Government of Kenya is obligated to provide the construction corridor free of encumbrances.”
Close to 90% financing of the project was provided by the African Development Bank.
“The Donor Facility was exhausted during the period ended 30 June, 2021 leaving a balance of KSh187,343,” added KURA.
The renovation of Kakamega-Webuye Road, whose initial total cost was estimated at KSh2.5 billion, was handled by KeNHA. By June, this had risen to KSh3.83 billion, exceeding the allocated amount by KSh1.3 billion.
The first estimate for the KSh9.55 billion (6-lane, Mwatate-Taveta Road) project was made by then-president Uhuru Kenyatta in 2017. However, the report reveals that the project ultimately ended up costing KSh10.5 billion when it was finished.
The forty-kilometer Kakamega-Webuye Road was anticipated to cost close to KSh5.65 billion to build, but when it was finished, taxpayers had to fork over an additional KSh783 million.
The SGR’s construction, from Mombasa to Nairobi as well as Nairobi to Naivasha, included cost overruns. The line connecting Mombasa and Nairobi was originally projected to cost KSh400.7 billion, but the actual expenditure was KSh404.3 billion. KeNHA chose not to comment on this report.
“Though not ideal, cost overruns for projects are expected owing to things like inflation, the cost of land, or changes in the scope of the works,”  according to a source within the agency who declined to be named because they are not allowed to speak to the press.
“However, the variation must not exceed a certain percentage,” said the source.
In order to develop highways across the nation, Mr. Kenyatta took out trillion-dollar loans, claiming that doing so would help the economy expand and open up the nation.
The government created the Public Finance Management (Public Investment Management) Regulations in 2022 to make sure that taxpayers obtain value for their money spent on projects because the cost of these massive projects would be inflated.
“Before a project is included in the budget, the relevant accounting officer shall—ensure that all conditions precedent are fulfilled, including land acquisition, compensation, stakeholder management and development partners’ requirements have been met,” say the PIM regulations.
In accordance with the regulations, comprehensive detailed drawings must also have received all necessary permissions. According to the data, the government component tended to grow in cases where the funding came from both the government and outside development partners.
As a result of the high cost of obtaining wayleaves for public projects, which has driven up the cost of projects, government funds are mostly used for land acquisition.
Contractors have been known to skip specific infrastructure without reducing the cost of the project, which has the additional effect of raising project costs.
According to an investigation by Auditor-General Nancy Gathungu, the Chinese contractor that constructed the KSh21.5 billion Nairobi Western Bypass left out 6 interchanges and other essential infrastructure that had been approved in the original road plan, depriving taxpayers of value for money.
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