The Cabinet has approved an additional 40 percent payout to road contractors with verified pending bills, in a move aimed at boosting stalled infrastructure works and easing cash flow constraints in the construction sector.

Chaired by President William Ruto at State House, Nairobi, the Cabinet resolved to continue using the Road Maintenance Levy Fund (RMLF) securitisation model to fast-track payments and support ongoing projects under financial strain.

According to a Cabinet dispatch, Sh64.2 billion has already been disbursed through the model, covering 40 percent of verified claims linked to 575 contracts across 393 road projects.

To further reduce outstanding amounts, the Cabinet endorsed an extra disbursement of up to 40 percent, bringing total payments to 80 percent of verified bills. However, contractors will only access the top-up if they agree to extend their final payment timelines by another 120 days.

“These measures have resolved long-standing financial obligations, unlocked stalled projects, improved contractor cash flow, and ensured continuity in infrastructure development nationwide,” the Cabinet noted.

The decision follows a Treasury-commissioned audit which revealed that only Sh230 billion of the Sh665 billion in government pending bills were valid. In the roads sector alone, contractors were owed more than Sh160 billion, according to figures earlier presented by the then Roads Cabinet Secretary Kipchumba Murkomen.

While the Cabinet maintained that settling pending bills remains a top priority to avoid delays in key infrastructure projects, the decision comes amid renewed legal and public scrutiny over the use of the RMLF securitisation model.

A court had previously stopped the release of Sh10.5 billion through this model following concerns about the exclusion of county governments in the decision-making process.

The approach, first rolled out in early 2024, enables the government to raise capital by turning future fuel levy collections into tradable bonds. These bonds are then sold to investors, allowing upfront payments to contractors without tapping into the exchequer or increasing direct debt.

The Kenya Roads Board, which manages the RMLF, has projected that as much as Sh175 billion could be mobilised through the arrangement.

While the government describes it as a creative way to ease funding delays and sustain development, questions have been raised over accountability and oversight. The International Monetary Fund has cautioned that the model lacks sufficient transparency and may bypass standard public debt monitoring practices.

Critics such as Kiharu MP Ndindi Nyoro have warned that sidestepping Parliament in financing decisions could erode fiscal discipline and set a risky precedent for future government borrowing.

Despite the concerns, the Cabinet said the payout will stabilise the roads sector and help speed up delivery of long-overdue infrastructure projects across the country.