KENHA to begin implementing the Annuity Framework project in 2015

Last Updated 10 years ago by Kenya Engineer

Eng. Linus Tonui
Back in 1983, he worked as an engineer with the Ministry of Roads, and since 2008, he has worked in different capacities in KENHA. He obtained his first degree in Civil Engineering from the University of Nairobi in 1982. In 1990, he went for Masters Studies and specialized in Highways. Formerly, Eng. Linus Tonui was the Acting Director General, Kenya National Highways Authority (KeNHA) since December 1, 2014 till Eng. Peter Mundinia’s appointment as Director General  recently.

What are some of the highlights of your engineering career to this level?
I started my engineering career as an Assistant Engineer in the Ministry of Roads in 1983. I have been attached to quite a number of different projects; Nairobi-Thika Superhighway is one of them. From 1984-86, I was in charge of Rural Roads Improvement Program in Kisumu, Siaya and Kisii. End of 1986, i came back to Nairobi and worked in design department in the Ministry of Roads. Between 1987-1989, I was posted to Elgeyo Marakwet to work as a District of Works Officer.  In 1991 to early 1993, I supervised construction of Kericho-Sotik road as a Deputy Resident Engineer, 1993-1994, I was a Resident Engineer working on construction of Webuye-Kitale-Kapenguria road and 1995-1999, I was the Provincial Works Officer for Rift Valley manning about one third of the Kenyan Roads between Turkana and Kajiado.  I became an Executive Engineer in Nairobi in 1999-2003, and lastly in 2005 i was cascaded as a registrar with ERB. This is the time ERB changed to Engineers Board of Kenya (EBK) and I advocated for some changes to the Engineers Act.

What does KENHA do?
Kenya National Highways Authority is a State Corporation created by the Kenya Roads Act, 2007. It was created alongside two other roads agencies, the Kenya Rural Roads Authority (KERRA) and the Kenya Urban Roads Authority (KURA). KeNHA is mandated to manage, develop, rehabilitate and maintain the national roads of the country
The national roads comprise Class A, B and C Roads which make about 14, 150 kilometres in total. Our goal as an Authority is to have the entire national road network in good motor able condition as per our motto of quality highways and better connections.

What are some of the great projects you have/are undertaking?

We have so many projects but I can mention a few. We have done improvements on the Northern Corridor (Mombasa-Malaba) through a number of donors. We did Sultan Hamud to Machakos turnoff and Sultan Hamud to Mtito Andei with financing from the World Bank. Also, we have signed a contract with African Development Bank (ADB) and finalised design between Jomo Kenyatta International Airport (JKIA) and Rironi. The section between Nakuru-Nairobi highway we will do through Public Private Partnership (PPP) concessioning and we already have a transactional advisor in place. The advisor is supposed to do designs and carry out the feasibility studies before tendering starts. We have also finished Kericho-Kisumu and Lanet -Timboroa-Eldoret roads. We have managed to sign for financing of about 300km road from Eldoret to Sudan border. Others projects that we have successfully concluded include, Nairobi-Thika Superhighway, Athi-River–Namanga Road and Isiolo-Merille River-Marsabit-Turbi-Moyale (A2) highway.

What is the annuity financed roads project, what roles do you play in it and how will it change road construction in Kenya?

Annuity basically is the development of minor agricultural roads to spur primary growth sectors through contractor facilitated financing mechanism.The Government of Kenya intends to develop and rehabilitate 10,000 km of our road network within the next five (5) years with financing sourced largely from the private sector under a new innovative initiative of annuity financing mechanism. The programme will be implemented in three phases. The first phase includes the development of 2,000 km, the second 3,000 km and phases three, 5,000 km. This programme has been dubbed Roads10000 programme.
Our role in this programme is to monitor and supervise to ensure everything is done to standard.

Key success factors and benefits to be realized from the program
The programme has received high level government support as well as an overwhelming response from the private sector. Some of the critical success factors from this programme include:
i)  Adequate local participation
ii)  Clear and sustainable framework for accessing financing from financial institutions
iii)  Longer term planning policy framework supported by adequate budgetary provision
iv)  Simplified procedures for entry into the market by both financiers and construction consortia within a clear legal framework and dispute resolution mechanism
v)  Reduced risk related to claims, time overruns, cost overruns
vi)  Sustainable funding for the development and maintenance of the expanded paved road network with Road Annuity Fund.
vii)  Predictable project implementation time frames
viii)  Business opportunities and employment within the road subsector
ix)   Accelerated economic growth in both rural and urban areas
x)   Affordable lending interest rates

How has roads construction changed in Kenya? What are some of the main changes brought in by the Chinese?

That is a very interesting question. In early 70’s and late 80’s, we did construct some roads. Currently, about 13,000km of roads have been built to spur economic growth. What was forgotten is that these roads needed maintenance as most roads were in bad condition. In the late 1970’s, road tolls were introduced to maintain roads which saw the creating of Kenya Roads Board (KRB) Act in early 1990. The Board was to form a body that would initiate better ways of managing roads. Fuel Levy Fund was also introduced through KRB Act where one would load a certain amount of money while buying fuel and it would come directly to KRB, which was used for the purposes of maintaining roads.  Consolidated funds from the Government of Kenya and financing from development partners has helped us to do the number of roads across the country. In six years, we have been able to rehabilitate and build quite a number of roads. Even though, we are seeing that the fuel levy isn’t sufficient to maintain the roads that we are churning out, we are looking forward to concessioning them to the private sector so as to charge a certain fee to ensure that in 20-30 years the roads are in good standard.

The Procurement and Disposal Act gives us a number of ways of procuring contracts though the default method, open tender. We have two types of bidding, international and national. Most of the big roads we do are actually advertised internationally, it attracts everybody from international countries. I think the Chinese must be having a policy that they want to venture into the world and Kenya has an open system that supports contractors to bid across the world. The first Chinese company to come to Kenya was when building the Sultan Hamud road in 2007-2008. After managing to design and deliver roads according to Kenyan standards, Chinese contractors continued to bid for major roads construction which the government advertised. The surprising thing is that their bids were lower in cost than from the local contractors. 

They have also done most three of four sections along Isiolo-Moyale except Eldoret –Malaba which is under European contractors. Though they have created challenges to our own local contractors as they can’t compete effectively with them which also drives away the Western contractors not by plan but due to the open tendering system. We have no problem with them (Chinese) so long as they are winning competitively and are delivering quality roads.

As KENHA what plans, do you have in 2015?

Our main objective this year is to start the annuity programme as this year we didn’t go to tender for any new project. Secondly, if the bill tabled in parliament which seeks to merge KURA with KENHA to become one is passed into law, then we will have to restructure this Authority in order to accommodate the engineers and staff from KURA. Thirdly, is to retrain most of our personnel through various refresher courses to be ready for the new approach of doing roads.

What are some of the challenges toward the achievement of your objectives in the roads sector?

In the existing system, we have the challenge of inadequate financing and inadequate budgets from the government. The budget for this year was KES25bn and it won’t change even next year. Secondly, our major problem is delays in land acquisition for development of road corridors due to the land ownership system in Kenya. Relocation of utilities, for example Kenya Power runs its power lines via our roads and when we tell them to move they go at a snail speed. There is low capacity amongst local contractors to undertake major construction works thus we are forced to use foreigners. Lastly, we are having an enormous shortage of trained and experienced professionals in the field of engineering.

What more can Kenya do to improve transport and communication network?

We need to introduce things other forms of transport in Nairobi like light transit systems to ease traffic congestion across the City and other regions. Another thing we need to have is a Bus Rapid Transport System, where we dedicate lanes within the cities to improve transport mobility. We should consider introducing interchanges separately at junctions.

What does the future hold for Kenya in terms of quality highways, better connections?

The future of quality highways and better connectivity in Kenya is bright and efficient. Kenya is on the lead in the region in making the best of the roads and especially express ways for people to travel without any interruption. We expect Kenyans to support us by not encroaching close to the roads.

Please expound more on the Annuity Model

This methodology of Infrastructure development involves engagement of a Consortium to design, construct and maintain a road based on agreed periodical payments. It is a variant form of Public Private Partnership (PPP) model in which the private operator (contractor) is remunerated via a periodical payment (annuity) by Government. The payments will be made against achieved milestones and will be made from the Road Annuity Fund, being a dedicated fund created for the annuity program.
The Ministry of Transport and Infrastructure through a consultative process with the road agencies and other stakeholders has identified key links and road sections to be included in the first phase of the program spread across the entire Republic of Kenya. Selection of proposed annuity projects for each Authority was done based on the need for network equity, equitable development and even distribution of road investment, enhanced connectivity and decongestion of  major urban areas.

Way Forward
To realize the objectives of the 10, 000 KM road program:
•    The private sector is expected to infuse more efficiency in the development, operations and maintenance of the road infrastructure in the country for sustainable economic growth.
•    There is need for continued stakeholder consultations during the procurement and implementation of the projects;
•    The National Treasury needs to provide adequate budgetary provisions to finance the programme. 
•    There is need for operationalization by Treasury of the Road Annuity Fund.
•    There is need to roll out the second phase and third phase of the program in 2015