Roads Cabinet Secretary Davis Chirchir was forced to explain a Ksh175 billion road infrastructure bond amidst fears the billions could balloon the country's Ksh11 trillion debt.
Appearing before the National Assembly's Budget and Appropriations Committee on Friday, September 5, Chirchir shed light on a Ksh175 billion long-term infrastructure bond facility from the Trade and Development Bank (TDB). According to Chirchir, the bond was not a loan as it was part of a financing arrangement where Ksh7 from the Road Maintenance Levy Fund (RMLF) was allocated to a Special Purpose Vehicle (SPV).
As such, the Ksh175 billion was not being borrowed by the government, but by the SPV, a legal entity created specifically for this deal.
So, instead of the government giving its promise (a sovereign guarantee) to repay the loan, the SPV would use future revenue from the RMLF as collateral. This is where the Ksh7 from the RMLF comes in, going to the SPV for this specific purpose.
