Questions arise over unused billions in Road Annuity Fund
Roads Principal Secretary Joseph Mbugua told the committee that the law gives the National Treasury Cabinet Secretary powers to declare a surplus and return the funds to the Consolidated Fund.
Members of Parliament have raised concerns over the return of Sh10.35 billion from the Road Annuity Fund to the Consolidated Fund, even as road projects across the country remain incomplete due to a lack of payments to contractors.
MPs sitting in the National Assembly’s Special Funds Accounts Committee (SFAC) were taken aback after learning that large sums allocated to the Road Annuity Fund were lying unused at the Central Bank of Kenya (CBK), despite repeated project delays.
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The fund, established under the 2015 Public Finance Management (Roads Annuity Fund) Regulations, was meant to finance the development and maintenance of roads under a public-private partnership model.
However, despite the continued allocation of money through a Sh3 per litre fuel levy, a significant portion of the funds remained idle during the 2022/23 financial year.
Roads Principal Secretary Joseph Mbugua told the committee that the law gives the National Treasury Cabinet Secretary powers to declare a surplus and return the funds to the Consolidated Fund.
“In line with procedure, the Sh10,350,000,000 consequently became an additional budget under the normal development budget,” he said.
“The Cabinet Secretary declared a surplus of Sh10.35 billion (comprising Sh8.45 billion and Sh1.9 billion) from the Annuity Fund into the Consolidated Fund,” Mbugua added.
The PS explained that the Sh8.45 billion portion was approved under Article 223 of the Constitution to support ongoing projects.
Auditor General Nancy Gathungu had earlier flagged concerns over the under-utilisation of the Fund.
In her report for the 2022/23 financial year, she noted that out of a final expenditure budget of Sh7.681 billion, only Sh3.634 billion was spent, representing 47 per cent absorption.
“The underperformance affected the planned activities of the Fund and may have hurt service delivery to the public,” Gathungu stated.
When pressed by the committee, chaired by Migori Woman Representative Fatuma Mohammed, PS Mbugua said that the actual disbursements were subject to approvals by the Roads Annuity Oversight Committee.
“There was therefore no over-expenditure against the approved budget. During the financial year, a surplus of Sh10.35 billion from the Annuity Fund was declared by the Cabinet Secretary, National Treasury. The surplus was used to pay for road projects approved by Parliament in the 2022/23 Supplementary Estimates,” he added.
Despite the government’s earlier plan to develop up to 10,000 kilometres of roads under the public-private partnership model, concerns remain over delays and a lack of transparency in fund use.
Fatuma however, questioned why money was returned to the Treasury while contractors remained unpaid and projects remained stagnant.
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