The demand for road construction equipment in Kenya is expected to rise over the next three years, following the State’s ambitious plan to construct a 10,000 km road network to open up remote areas in the country.
The Kenya Rural Roads Authority (Kerra), which oversees rural roads construction, reckons the project will require 1,440 earth movers, 1,080 rollers and 540 excavators – watering the market for equipment dealers.
“Some of the equipment is not available in the country. Business opportunities therefore exist, for example, to import the equipment and lease/hire them to local contractors,” Kerra said in a statement.
The Sh260 billion-project, whose bidding closed on August 29, is also expected to be a major boon for cement, steel and iron producers.
The construction of the initial 2,000 km of roads, which is set to begin in December at a cost of Sh52 billion, will consume about 60,000 tonnes of cement, 15,000 tonnes of lime and 80 million litres of bitumen.
The government has adopted a new financing model dubbed annuity concessions where contractors will borrow money from local commercial banks to implement projects with the Treasury acting as a guarantor.
Under the new model, a contractor will design, construct, finance and maintain the road for 10 years before handing it over to the government.
This is aimed at improving efficiency among local contractors while ensuring availability of funds to prevent time and cost overruns that have been experienced in the past.
In addition to accelerating the pace of infrastructural development in the country, the annuity model will see the government transfer construction, operation and maintenance risks to the private sector.
Road construction in Kenya has for decades lagged due to cash shortfalls, with only a partly 14,000km or 8.7 per cent of the total road network being tarmacked.