Government reviews capital limits for state contractors

Government spending on infrastructure projects has increased over the past few years.
Government spending on infrastructure projects has increased over the past few years. PHOTO/FILE
Contractors eyeing state jobs will be required to hike their capital base in a move likely to cut off budding firms from tendering for government contracts.

The Ministry of Public Works has announced new rates requiring “category A” contractors to double their capital to Sh500 million and specialised “category A” contractors to increase their capital five times to Sh250 million.

The ministry has also doubled the minimum capital requirement for general contractors in “category H” to Sh10 million while raising the capital for specialist contractors to Sh5 million up from Sh1 million.

According to Moses Nyakiongora, the chief quantity surveyor at the Ministry of Public Works, the new rates are meant to capture the risen value of construction projects since the last review while raising competitiveness among contractors’.

“The new class limits will downgrade the classification of contractors that fail to raise their capital requirements, restricting the value and level of state jobs they can tender for,” said Mr  Nyakiongora.

The ministry has also raised application and renewal fees by between 50 and 100 per cent depending on the categories.

Budding contractors have lamented that the new class limits will bar small firms from tendering for state projects while favouring the well established contractors.

The capital requirements were last reviewed in 2004.

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