Taxpayers' agony as Outer Ring road cost set to rise by Sh8 billion

An artistic impression of Outer Ring Road. The government needs to raise an additional Sh7.9 billion for the 13km road. The contractor varied the design, pushing cost estimates up by 24 per cent to Sh9.2 billion. PHOTO | COURTESY  

In Summary

• The dual carriageway was supposed to cost Sh7.4 billion, as per the bid application, to be funded by the African Development Bank up to 90 per cent while the government would come in with 10 per cent.
• Variations of the design based on site conditions and improvements has pushed the cost estimates up by 24 per cent to Sh9.2 billion. 
• An additional Sh1.2 billion is needed to pay for the cost of relocating water and sewerage lines.
  A further Sh3 billion would go to land acquisition for the section between Donholm roundabout and Taj Mall — the shortest of the two stretches. 
• The other section — Donholm roundabout to Thika superhighway — cost Sh1.5 billion in land acquisition with only three property owners being paid.

By OTIATO GUGUYU
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The construction of Outer Ring Road risks further delay as project variation more than doubles the initial cost.
The government needs to raise an additional Sh7.9 billion for the 13km road after the contractor factored in new costs, including variation of the contract. 

The new design would, however, reduce the width of the main carriage way to 7.5 metres from 9 metres and exclude the bus rapid transport (BRT) line from the bridges and flyovers. 
This could result in huge traffic snarl-ups such as those currently witnessed at the Pangani section of Thika superhighway. 

BEHIND SCHEDULE
Construction of the Outer Ring Road is already behind schedule by a year, with the contractor having done only 5 per cent of the work.
Infrastructure Principal Secretary John Mosonik said the delay was as a result of land acquisition and relocation of services. 
The El Niño rains, expected in two weeks, are likely to further interfere with the man hours dedicated to the job.
“Given the disruptions, we have not officially extended the project because that takes a whole process, so we will try to work within the limits we have,” said the PS.

DESIGN VARIATION
The dual carriageway was supposed to cost Sh7.4 billion, as per the bid application, to be funded by the African Development Bank up to 90 per cent while the government would come in with 10 per cent.
However, variations of the design based on site conditions and improvements has pushed the cost estimates up by 24 per cent to Sh9.2 billion. 

An additional Sh1.2 billion is needed to pay for the cost of relocating water and sewerage lines.
A further Sh3 billion would go to land acquisition for the section between Donholm roundabout and Taj Mall — the shortest of the two stretches. 

The other section — Donholm roundabout to Thika superhighway — cost Sh1.5 billion in land acquisition with only three property owners being paid.

TAX NOTICE
The Kenya Revenue Authority served the consultants a Sh146 million tax notice for supervision and gave the contractor a Sh1.4 billion VAT notice for road works. 

They both want Kenya Urban Roads Authority to foot the bills.
The government is also expected to chip in with 3.5 per cent counterpart funding for the contract, amounting to Sh258 million. 
The Infrastructure PS said the contractors had already mobilised 90 per cent of their resources and that the government was working out some of the issues to ensure the project is completed in time.
“You know the law now requires that projects should factor in taxation as a component, however, some of these projects came before the law although for this one we took six to nine months to start, we are in discussion about it (tax),” said Mr Mosonik.
The new designs will include elevation of Taj Mall flyover to a three level interchange. 

The contractors would also use concrete piers for the entry point to the proposed fresh produce market on Kangundo Road to enhance security and ease the movement of pedestrians.