Ministries explain Sh8.1b suspect allocations

The government has come out to explain suspect allocations of Sh8.1 billion in small amounts to infrastructure projects in the new budget that were flagged by the Parliamentary Budget Office (PBO).

The PBO, which advises Parliament on budget issues, had raised concerns in its latest report over allocations in the 2020/21 budget relating to 64 projects.

Some of the projects had long been completed, their completion certificates issued and thought to have been fully paid for by the taxpayer and other international lenders.

However, the projects have mysteriously been allocated small amounts of money that add up to Sh8.1 billion.

The Infrastructure ministry has explained that constraints in financial resources is one of the reasons the government is struggling to repay billions of shillings for projects that had been marked as complete.

Transport and Infrastructure Principal Secretary Paul Maringa explained that the resources available do not allow for allocations of the required amounts owing to the number of projects that are supposed to benefit from available budget ceilings.

“Payment obligations relating to a project only cease once the contract and its subsidiary costs are fully made. Physical completion of a project does not necessarily mean that the financial obligations have been fully met,” Prof Maringa said in a statement Friday.

He said unresolved contract completion issues still under negotiation, such as the payment of forex losses on long-concluded projects like the Sultan Hamud-Machakos Turn-off, are expected to be completed during the 2020/2021 financial.

He further explained that payments are based on the contracted works and other subsidiary costs related to the project such as land compensation and relocation of services.

“Road works are contracted on extreme need basis based on the prevailing circumstances and conditions. This is predetermined by the fact that waiting to fully complete projects financially prior to commencing any other may result in more suffering and greater overall loss to the citizen and the economy,” he said.

He said about half of the Sh8.1 billion is for the dualling of the Kenol-Maragua-Sagana road funded by the African Development Bank.

He explained that the allocation of small amounts, like Sh5 million, to big projects was for clearing small outstanding bills or designs for extensions of the project.

At the same time, Treasury Cabinet Secretary Ukur Yatani offered an explanation for delays in receiving and disbursing Sh503 million from the government of Denmark to help counties fight the Covid-19 pandemic.

The delays gave the embassy the impression that Kenya was not interested in the funding to support dispensaries and health centres in counties, as well as water provision in the slums of Nairobi.

Mr Yatani explained that Treasury received the communication from the Danish embassy on the funding after the second supplementary budget had already been approved by the National Assembly.

“In line with the dictate of our Constitution and PFM (Public Finance Management Act), we can only disburse public funds or funds for public use after appropriation by the relevant assembly,” Treasury said.

Naturally, therefore, the National Treasury had to explore alternative means of channelling the resources for the intended entities, while ensuring compliance with the law despite the urgency to disburse it.

He said that because the amount was additional funding, it required that the original financing agreement, on which the grant is anchored, be amended.

“To this effect, we have now effected the desired changes and signed the amended agreement between ourselves and Denmark. The National Treasury could not authorise expenditure of the funds without the aforementioned procedural motion,” he said.

The Treasury, he said, wrote to the Embassy of Denmark formally conveying the government’s acceptance of the additional funding.

“The National Treasury wishes to convey the government’s appreciation of the financial assistance from the Government of Denmark and to reiterate that plans have been put in place to ensure that disbursement of the funds will be fast-tracked once the remaining actions from both sides and remaining formal processes are concluded, latest early next week,” the Treasury boss said.

The concerns had put the spotlight on the Jubilee administration’s strategy of spending billions of shillings on expensive infrastructure projects and being unable to stick to its own policy of completing old projects before starting new ones.