The Government will pay out Sh8 billion to road contractors by tomorrow to settle part of the debt owed to them, Infrastructure Principal Secretary John Mosonik said yesterday.
In a phone interview, Mr Mosonik said the total outstanding amount owed as at November 31 this year was Sh33 billion, which had accumulated over time owing to inadequate budgetary allocations.
“We have managed the pending bills that were due when the current Government assumed power in 2013. Then, we were one year behind schedule in terms of clearing contractors’ arrears.
“As at December 31, 2013, the total pending bills stood at Sh25.7 billion. We managed to pay Sh9.5 billion out of the annual budgetary allocation we got from the Exchequer. Later, we got Sh15 billion through the Supplementary Budget, which we committed to clear these pending bills,” he said.
Funds diversion
This means that by the end of December 2013, the Government owed contractors Sh1.2 billion, having spent Sh24.5 billion on clearing arrears.
However, between January and November this year, the pending bills accumulated to Sh33 billion, including the Sh1.2 billion carried over in 2013.
Mosonik partly attributed the accumulation of this year’s debt to the diversion of funds set aside for two roads authorities — Kenya Urban Roads Authority (Kura) and Kenya Rural Roads Authority (Kerra) — to county governments.
“For six months in 2013, we operated without enough funds to foot pending bills. This led to a greater accumulation of arrears. We received our first budgetary allocation of Sh15 billion during the Supplementary Budget of 2013/14,” said Mosonik.
In the current 2014/2015 financial year, National Treasury Cabinet Secretary Henry Rotich allocated the Ministry of Transport and Infrastructure Sh41 billion to manage ongoing infrastructure projects and clear pending bills.
Mosonik said of the allocation, only Sh15 billion has been released by the Treasury so far. However, the ministry is expecting another Sh8 billion by tomorrow, which will go towards off-setting the debt owed to contractors.
“Our balance of arrears to contractors as at the end of December 31, 2014 will be Sh10 billion,” Mosonik said.
He added that the issue of arrears will not deter the actualisation of the Government’s infrastructure development agenda, which is identified in the second Medium Term Plan (MTPII 2013-2017) as critical to sustained economic growth and development.
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