Gov’t backs debt-free fix to road crisis via securitization » Capital News

NAIROBI, Kenya Jun 20 – The Kenya Roads Board (KRB) has adopted a new financing model to tackle the country’s infrastructure backlog, becoming the first public agency in Kenya to use securitization to raise funds without adding to the public debt burden.

Faced with over Sh175 billion in unpaid bills and more than 580 stalled road projects, KRB has securitized part of its revenue from the Road Maintenance Levy Fund (RMLF).

The move according to the Transport Cabinet Secretary Davis Chirchir allows it to raise the full amount now by leveraging future earnings, specifically Sh7 of every Sh25 collected per litre of fuel over the next ten years.

Instead of borrowing or introducing new taxes, Chirchir noted KRB transferred this revenue stream to a Special Purpose Vehicle (SPV), which in turn raised the Sh175 billion upfront from private investors.

These investors will be repaid directly from the fuel levy, without involving the government budget.

“This isn’t a new tax or a loan. It’s a smarter use of what we already collect,” Chirchir said.

Through the approach, Chirchir stressed KRB can immediately clear contractor arrears, resume work on stalled road projects, and stimulate job creation in the construction sector.

The deal also shields the public from fuel price hikes and debt servicing pressure, as the investors, not the exchequer, bear the risk of revenue shortfalls.

Chirchir added that the model could be replicated by other government agencies with steady revenue streams such as the Kenya Airports Authority, Kenya Ports Authority, and KenGen.