Roads Ministry Seeks Innovative Financing to Clear Sh850Bn Liabilities

The State Department of Roads has prioritised the allocation of its available budget ceiling to the construction, rehabilitation and maintenance of roads, Cabinet Secretary (CS) Davis Chirchir told lawmakers on Monday.

Appearing before the Transport and Infrastructure Committee chaired by George Kariuki, the CS said the department is focusing on completing ongoing projects, providing counterpart funding for development partner-supported initiatives and implementing key government strategic interventions aimed at job creation and other national priorities.

CS Chirchir revealed that the Roads Sub-sector’s outstanding Government of Kenya (GoK) obligation portfolio stands at approximately Kshs.850 billion, compared to the 2026 Budget Policy Statement (BPS) ceiling of Kshs.70 billion for the 2026/27 financial year.

He noted that based on contracted timelines and contractor capacity, the portfolio would ideally require about Kshs.320 billion annually over three years to be fully implemented.

However, with the ceiling unlikely to increase over the next five years, the Department warned that clearing the backlog could take more than a decade, potentially driving up costs due to inflation, interest and contractor claims if alternative financing mechanisms are not adopted.

"To bridge the financing gap, the Roads Sub-sector is exploring innovative funding models to sustain growing demand for road infrastructure." CS Chirchir

Lawmakers sought clarification on the status of pending bills as at January 31, 2026, including verified historical arrears, and details on whether their settlement had been factored into the proposed 2026/27 ceilings.

Principal Secretary Joseph Mbugua told the Committee that pending bills as at December 31, 2025 amounted to Kshs.89.8 billion. Of this, Kshs.42.8 billion related to the period between January 1 and December 31, 2025, while Kshs.47 billion dated back to periods prior to December 31, 2024.

He further disclosed that pending bills up to December 31, 2024 had stood at approximately Kshs.173 billion.

“Under the Road Infrastructure Loan Facility/Note Issuance Programme, the Ministry securitised Kshs.7 per litre of fuel to raise Kshs.175 billion to clear arrears. So far, Kshs.126 billion has been paid through a bridge facility, with the remaining Kshs.47 billion to be settled once the securitisation bond is floated and subscribed”, he told the Committee

For the period between January 1 and December 31, 2025, principal works and consultancies pending bills totalled Kshs.31.8 billion against a printed budget balance of Kshs.6.5 billion, leaving an unfunded amount of Kshs.25.3 billion.

The PS said the Department had settled the Kshs.25.3 billion through the bridge facility and requested Exchequer funding of Kshs.6.5 billion to clear the remaining balance.

Responding to questions on why some road contracts were marked as terminated, PS Mbugua said certain contractors had used pending bills to mask performance shortcomings and opted to end contracts and seek immediate re-tendering once payments were made.

Committee Members also raised concerns over equitable distribution of projects nationwide. Hon. Ibrahim Saney questioned the status of the Mandera–El Wak road, a key segment of the 750-kilometre Isiolo–Mandera Highway in Northern Kenya.