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Advertising firms to maintain roads instead of buying space [Nation (Kenya)]
[March 24, 2014]

Advertising firms to maintain roads instead of buying space [Nation (Kenya)]

(Nation (Kenya) Via Acquire Media NewsEdge) Plans to allocate public relations companies sections of roads to maintain instead of paying the government for advertising space has gained momentum, with draft regulations set to be released soon.

In an interview with Smart Company last week, Transport and Infrastructure Cabinet secretary Michael Kamau said the proposed model is expected to significantly cut the government's expenditure on road repair and maintenance.

Under the new regime, advertising companies such as Magnate Ventures and Alliance Media would be required to use a portion of the revenues they collect from running adverts on roadside billboards to fund the maintenance of the roads in exchange for a cut in the rates they pay local authorities.

PERFORMANCE CONTRACTS "Advertising contracts will be crafted in a manner that allows the advertisers to become responsible for routine maintenance of particular sections of the roads where the advertisements are located," Mr Kamau said.

"There is no point of collecting money from these companies and taking it to the bank, only to start another rigorous procurement procedure to hire a contractor to carry out maintenance on the roads." He added: "We can instead sign performance contracts with the advertisers so that they work on portholes, landscaping, traffic lights, and other maintenance components of road maintenance since they benefit from them." CUTTING EXPENDITURE The proposal is part of new policy measures taken by the government in a bid to cut expenditure on road construction and maintenance by up to 30 per cent.

Though a new concept in this market, the new initiative is supported by experts, who say it would make it easier for the government to keep roads, especially those in urban centres, in a good condition.

"Funding and planning for our roads is a major challenge. The feeder roads in various parts of the city are tattered. So, it is important that we look for other ways of funding these roads," said Mr Mohammed Nyaoga, a governance and public private partnership consultant in an earlier interview.

Kenya National Highways Authority director general Meshack Kidenda said the new concept is a good example of how private-public partnerships can be used to spur development in the country.

"We don't have to keep going to the exchequer for money to finance the maintenance of every road while private companies are making money from the facilities," said Mr Kidenda.

The new measures also stipulate that contractors working on all paved roads will be required to carry out maintenance for at least five years.

"During this period, the contractor would be responsible for all routine maintenance," the minister said.

CONCESSIONING The minister also called for a new comprehensive study of all roads that are viable for concessioning and thereafter immediately commence procurement for concessionaries.

In countries like South Africa, the government or local authorities engage private firms in the construction and management of public infrastructure.

The firms then recoup their investments by tolling in the case of road projects and concessioning for railway services for an agreed period.

Old Mutual has, for instance, been a key player in such projects, especially in South Africa.

Former president Mwai Kibaki signed the Public Private Partnerships Bill 2012 into law, providing for the participation of the private sector in the financing, construction, development, operation, and maintenance of infrastructure or development projects through concession and other contractual arrangements.

The law also provides for the establishment of institutions to regulate, monitor and supervise the implementation of agreements on infrastructure and development projects.

The minister was speaking on the side lines of a consultative forum organised by the Ministry of Transport and Infrastructure to deliberate on the state of projects development in the country.

The meeting was attended by contractors, consultants, and financiers in the road and transport sub-sectors.

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