The weakening shilling and high cost of construction are threatening to stall multi-billion road projects in Kenya, a senior government official has said.
Ministry of Roads permanent secretary (PS) Michael Kamau said the weak shilling has hit the road construction sector hard as many of the ongoing projects commenced when the shilling was exchanging at Sh75 to the dollar, compared to Sh100 today.
“The cost of some of the projects have shot up beyond the maximum variation allowed and it is likely the projects will have to go through fresh tenders to complete the remaining parts,” said Mr Kamau.
The PS, who was speaking during a conference with Arab development partners at the Laico Regency hotel, said the costs of key materials used for road construction have risen sharply in recent times and this, together with a weakening shilling, has brought about massive variations in costs.
For example, Thika Road expansion project, which started in April 2009, is projected to cost Sh36.5 billion up from the initial value of Sh27 billion, reflecting a 35 per cent price variation.
The standard variation of prices allowable for most projects in Kenya is 7.5 per cent, and any variations beyond this limit must be approved by Parliament before allocation of extra funds.