Thursday, 5 June, 2025
National Treasury PS gives Public Debt and Privatization Committee details on planned securitization
Parliament BuildingsWednesday 4th June, 2025
The National Treasury Principal Secretary, Dr. Chris Kiptoo, was tasked by the National Assembly Committee on Public Debt and Privatization to provide details on the planned Kenya Roads Boards securitization of additional Kshs 12 per litre of the Roads Maintenance Levy Fund (RMLF).
The PS who had appeared before the Committee chaired by Hon. Abdi Shurie (Balambala) was providing information on securitization policy in Kenya and recent and planned securitization of public funds.
Dr. Kiptoo told the Committee that out of the Kshs 12, Kshs. 7.00 per litre is meant to raise Kshs. 175 billion, and an additional Kshs. 5.00 per litre is to raise approximately Kshs. 125 billion to ensure that the on-going roadworks progress without funding constraints.
“The proceeds of this securitization shall be applied to settle maturing obligations of the road maintenance agencies as the fall due. The KRB shall continue to coordinate the Note Issuance Programme through the sale of Kshs. 5.00 from Fuel Levy to the existing Special Purpose Vehicle-Oak Assetco SPV Limited -under similar terms as the facility for Kshs. 175billion, with Eastern and Southern African Trade and Development Bank as the Lead Arranger and Transaction Adviser,” Dr. Kiptoo said.
Reacting to the presentation Hon Aden Daud (Wajir East) asked the PS why they had increased RMLF by an extra Kshs 5 surpassing the initial Kshs 7 approved by Parliament.
Hon. Joseph Makilap (Baringo North) also wanted to know the legality of borrowing and spending using the Kshs 7 under the RMLF and the loans already acquired by the KRB using it as a securitization.
“We want to know whether it is even legal to borrow and spend using the Kshs 7 RMLF and the money that you have borrowed and from which institutions and the interest charged on them because we are not even aware of that,” Hon. Makilap asked.
While answering the Members, Mr.Lawrence Kibet, the Director General Public Investment and Portfolio Management told the Members that the entire process is legal and that Section 6(2)(h) of the Kenya Roads Board Act, Cap 408, mandates the Board to develop and implement a roadwork financing strategy, which may include borrowing or securitization arrangements.
“Under the securitization arrangements; public funds are pooled and transferred to a special purpose vehicle (SPV). The SPV issues asset-backed securities to investors, with payment to investors derived from cash flows of the transferred assets. The investors bear the risk associated with the underlying assets, while the government is freed from the burden of managing those assets,” Mr. Kibet said
According to the DG, securitization of public funds in Kenya refers to the process where the government or public entities transfer their assets or receivables to a special purpose vehicle (SPV), which then issues securities backed by those assets to investors. This allows the government to raise funds and access capital markets, while also potentially spreading the risk with those assets.
The PS and his team are set to appear again before the Committee next week to furnish it with more details about the securitization