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December 5th, 2011, 04:54 AM
Kenya plans to spur infrastructure growth with new legislation
http://www.businessdailyafrica.com/image/view/-/1282698/medRes/314525/-/maxw/600/-/ivxmjz/-/infrastructure.jpg
BDA (http://www.businessdailyafrica.com/Corporate+News/Kenya+plans+to+spur+infrastructure+growth+with+new+legislation/-/539550/1282694/-/oh70erz/-/index.html)
Kenya plans to enact a public private partnership (PPP) law by February next year seeking to spur infrastructural investment. The country’s funding deficit in infrastructure is estimated at Sh232 billion, which the new law hopes to bridge.
The legislation will map out ways through which the government will choose projects to develop in partnerships, and who qualifies for sovereign guarantees. The State has in the past shied away from the model due to impact on national debt.
“Majority of these guarantees will be channelled towards energy projects which after close scrutiny are determined to be potentially beneficial to Kenyans coming at a time when power in the country remains expensive,” Mr Kinyua said. “A Cabinet sub-committee has already passed the draft law and it is now set to be brought before a full Cabinet sitting and thereafter brought for debate in Parliament most likely in January or early February.”
The PS added that given the challenges and complexities inherent in PPPs’, the best way of dealing with such projects was to have them well-thought out and strengthened by laying them out in a law to increase investor confidence.
Government has in the past been reluctant to enter into such agreements citing risks such as ballooning the public debt, political uncertainty, and currency fluctuation.
This fact has been made worse by revelations that Treasury had fallen short of its revenue targets by Sh30 billion — a situation arising from lower than expected tax collections and slow donor disbursements.
Treasury says that it is aware of the risks but PPPs remain the only avenue to put up energy projects worth $57 billion required by 2030.
“The catch here is that we do not overburden our finances by offering huge incentives but at the same time giving beneficial investment for citizens while getting a return to investors,” Mr Kinyua said.
“The major hurdle facing most energy projects is the fact that government is struggling to build forex coverage which is needed in order to pay for the large infrastructural projects they get into,” said George Wachira, an independent oil sector analyst and director of Petroleum Focus Consultants.
“The trend to avoid giving guarantees has dissuaded financiers and prolonged the country’s reliance on expensive thermal generation that depends on imported oil,” he added.
http://www.businessdailyafrica.com/image/view/-/1282698/medRes/314525/-/maxw/600/-/ivxmjz/-/infrastructure.jpg
BDA (http://www.businessdailyafrica.com/Corporate+News/Kenya+plans+to+spur+infrastructure+growth+with+new+legislation/-/539550/1282694/-/oh70erz/-/index.html)
Kenya plans to enact a public private partnership (PPP) law by February next year seeking to spur infrastructural investment. The country’s funding deficit in infrastructure is estimated at Sh232 billion, which the new law hopes to bridge.
The legislation will map out ways through which the government will choose projects to develop in partnerships, and who qualifies for sovereign guarantees. The State has in the past shied away from the model due to impact on national debt.
“Majority of these guarantees will be channelled towards energy projects which after close scrutiny are determined to be potentially beneficial to Kenyans coming at a time when power in the country remains expensive,” Mr Kinyua said. “A Cabinet sub-committee has already passed the draft law and it is now set to be brought before a full Cabinet sitting and thereafter brought for debate in Parliament most likely in January or early February.”
The PS added that given the challenges and complexities inherent in PPPs’, the best way of dealing with such projects was to have them well-thought out and strengthened by laying them out in a law to increase investor confidence.
Government has in the past been reluctant to enter into such agreements citing risks such as ballooning the public debt, political uncertainty, and currency fluctuation.
This fact has been made worse by revelations that Treasury had fallen short of its revenue targets by Sh30 billion — a situation arising from lower than expected tax collections and slow donor disbursements.
Treasury says that it is aware of the risks but PPPs remain the only avenue to put up energy projects worth $57 billion required by 2030.
“The catch here is that we do not overburden our finances by offering huge incentives but at the same time giving beneficial investment for citizens while getting a return to investors,” Mr Kinyua said.
“The major hurdle facing most energy projects is the fact that government is struggling to build forex coverage which is needed in order to pay for the large infrastructural projects they get into,” said George Wachira, an independent oil sector analyst and director of Petroleum Focus Consultants.
“The trend to avoid giving guarantees has dissuaded financiers and prolonged the country’s reliance on expensive thermal generation that depends on imported oil,” he added.