Idle funds, stalled roads: MPs raise red flags on Treasury action

A parliamentary committee has questioned the National Treasury’s decision to return Sh10.35 billion from the Road Annuity Fund to the Consolidated Fund, as stalled infrastructure projects continue to inconvenience citizens across the country.

The Special Funds Accounts Committee (SFAC) of the National Assembly expressed frustration over the failure to utilise billions earmarked for road development, even as contractors halt operations over delayed payments.

The Road Annuity Fund was introduced in 2016 to support the construction and maintenance of roads through public-private partnerships.

It is financed by a levy of Sh3 per litre of fuel sold in Kenya and is managed under the Public Finance Management (Roads Annuity Fund) Regulations, 2015.

Despite being a key funding mechanism meant to ease pressure on the national budget, the committee heard that huge amounts of the fund were lying idle at the Central Bank of Kenya, only to be declared surplus at the end of the financial year.

Roads Principal Secretary Joseph Mbugua, who appeared before the committee, said, "In line with procedure, the Sh10,350,000,000 consequently became an additional budget under the normal development budget."

He added, "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 explained that the Sh8.45 billion portion of the surplus had already been approved under Article 223 of the Constitution and went toward continuing road projects that Parliament had approved in the 2022/23 Supplementary Estimates.

Auditor General Nancy Gathungu had earlier raised concerns about the underutilization of funds.

In her report, she pointed out that out of a budgeted Sh7.681 billion for the Road Annuity Fund, only Sh3.634 billion was used—just 47 percent.

"The underperformance affected the planned activities of the Fund and may have impacted negatively on service delivery to the public," she said.

PS Mbugua told the committee that the Roads Annuity Oversight Committee is responsible for approving all disbursements from the Fund.

He further stated that actual spending for the year stood at Sh4.047 billion, and there was no overspending.

The government had approved the development of 10,000 kilometres of roads under the annuity model, but slow disbursement and lack of accountability are threatening the project’s success.

Migori Woman Representative Fatuma Mohammed, who chairs the committee, criticised the Treasury’s move to return the money when contractors remained unpaid.