State Risks Sh180 Billion Bill if Rironi–Mau Summit Road Deal Is Cancelled

Kenya could face a potential Sh180.73 billion compensation bill if the government terminates contracts for the construction of the Rironi–Mau Summit highway, raising concerns about the financial risks tied to major infrastructure projects.

According to Treasury estimates published in the draft 2027 Budget Policy Statement, the potential liability relates to the two sections of the highway being developed under public-private partnership (PPP) arrangements.

The figures show that terminating the Rironi–Naivasha–Gilgil and Rironi–Mai Mahiu–Naivasha sections could expose the government to payments of Sh93.38 billion. The Gilgil–Nakuru–Mau Summit section carries a further potential liability of Sh87.35 billion.

The combined exposure stands at Sh180.73 billion, making the highway one of the major infrastructure projects that could create significant financial obligations for taxpayers if its contracts are terminated prematurely.

However, the Treasury has clarified that the amount is not an expected payment. It represents the maximum potential exposure if contractual conditions trigger compensation. The actual amount and timing would depend on the circumstances surrounding any termination.

The 233-kilometre highway is designed to improve transport between Nairobi and the Rift Valley, easing congestion and supporting the movement of people and goods.

The project was divided into two sections after the government changed its approach to delivering the road. China Road and Bridge Corporation (CRBC), working with the National Social Security Fund (NSSF), is responsible for sections valued at approximately Sh96.38 billion.

Shandong Road and Bridge International is developing the Gilgil–Nakuru–Mau Summit section at an estimated cost of Sh86.35 billion.

Both arrangements are based on long-term contracts under which private partners are expected to finance, construct, operate and maintain the road before handing it back to the government.

The government has previously faced compensation costs after cancelling an earlier agreement with a French consortium led by Vinci Highways.

The administration of President William Ruto terminated that deal after disagreements over its financial terms. Kenya subsequently paid Sh7.3 billion to settle the dispute and avoid a potentially costly legal battle.

The latest Treasury figures highlight the financial consequences that can arise when long-term infrastructure agreements are terminated early.

With construction progressing on the Rironi–Mau Summit highway, the potential Sh180.73 billion liability underscores the importance of managing contractual obligations carefully to protect public finances.

SOURCE:https://x.com/ntvkenya/status/2114914987273797706

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