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By Otiato Guguyu | Published Thu, July 5th 2018 at 00:00, Updated July 5th 2018 at 09:39 GMT +3
Kenya cannot afford to take more loans since mega infrastructure projects undertaken by the Government are not making any money to repay debts.
Central Bank Governor Patrick Njoroge said the State had to abandon the model of borrowing and let the private sector drive the economy.
“We have less headroom to borrow and we are running out of space. We need to look at public-private partnership and build operate and transfer models,” said Dr Njoroge.
“We have had 15 per cent rise in debt over the past few years but what is the return? In fact it is negative, infrastructure is costing us money. We do not have to look very far, Hambantota port in Sri Lanka is gone,” said Rich Management CEO Aly Khan Satchu.
Break even
Operations at the Standard Gauge Railways will take at least three years before it breaks even, according to Kenya Railways Corporation Managing Director Atanas Maina. And until then the Government is sinking in more money to run it.
“Any business takes about five years to break even and we are targeting three. We want to have a surplus by five years,” said Mr Maina.
He said he could not provide the exact cost-plugging the Government was doing because factors keep changing, citing the number of trains they are running, which will soon grow to seven, as an example.
In energy, Kenya is paying billions of shillings for over-capacity and guarantees to firms for idle plants, including Sh13.9 billion to Lake Turkana Wind Power and Sh37 billion to Lamu Coal-fired plant.
On roads, the Government has realised that the Road Maintenance Levy factored in retail fuel prices has not been adequate to cater for road repairs, and hence use of major trunk roads will attract a fee as the Government sets up toll stations along them.
We're over borrowing ceiling, says Central Bank Governor Patrick Njoroge
Kenya cannot afford to take more loans since mega infrastructure projects undertaken by the Government are not making any money to repay debts.
Central Bank Governor Patrick Njoroge said the State had to abandon the model of borrowing and let the private sector drive the economy.
“We have less headroom to borrow and we are running out of space. We need to look at public-private partnership and build operate and transfer models,” said Dr Njoroge.
“We have had 15 per cent rise in debt over the past few years but what is the return? In fact it is negative, infrastructure is costing us money. We do not have to look very far, Hambantota port in Sri Lanka is gone,” said Rich Management CEO Aly Khan Satchu.
Break even
Operations at the Standard Gauge Railways will take at least three years before it breaks even, according to Kenya Railways Corporation Managing Director Atanas Maina. And until then the Government is sinking in more money to run it.
“Any business takes about five years to break even and we are targeting three. We want to have a surplus by five years,” said Mr Maina.
He said he could not provide the exact cost-plugging the Government was doing because factors keep changing, citing the number of trains they are running, which will soon grow to seven, as an example.
In energy, Kenya is paying billions of shillings for over-capacity and guarantees to firms for idle plants, including Sh13.9 billion to Lake Turkana Wind Power and Sh37 billion to Lamu Coal-fired plant.
On roads, the Government has realised that the Road Maintenance Levy factored in retail fuel prices has not been adequate to cater for road repairs, and hence use of major trunk roads will attract a fee as the Government sets up toll stations along them.
We're over borrowing ceiling, says Central Bank Governor Patrick Njoroge
