Ruto Pledges that they will construct 100 mega dams.Sucess or Failure

 

100 Dams is it possible

The Kenyan Kwanza has promised that it will construct 100 mega dams in the coming years. This has received lots of questioning arising from the failure of other governments in completion of the dam projects.

In this article we shall evaluate the mechanisms which the government will employ to achieve this huge project. We shall also look at the factors that may make this promise un realistic

HOW WILL THE KENYA KWANZA GOVERNMENT FINANCE THIS IDEA

The Kenya Kanza government has said it will other innovative methods to finance this project. In this way the government has said it will use Public private Partnerships (PPPs) to finance the project. This will involve agreements with the government  and private investors .

The private investors will take the risk of financing the construction of the dams and later gain his profit through the sale of the water and energy, this will be based on the water and energy purchase agreements between the government and the investors.

POLICY FORMULATION ON  WATER PURCHASE AND ENERGY PURCHASE AGREEMENT

The government is set to make policy formulation on water purchase agreements so to allow investors to recoup the investment through the sale of the water and energy. This will also room for the entry of more foreign and local investors.

WHAT ARE THE DISADVANTAGES OF FINANCING THE DAM PROJECT USING THIS MODEL

1.       Fast development of projects

The primary goal of an investor is to make profit through his investment. PPP models tend to be done at a shorter period compared to government financed projects. This effective in provision of services to the citizen. The government should always monitor and regulate the standards the investors so they cannot develop weak facilities as they quicken their developments

2.       Development can be done if the government lacks enough revenue

The PPP models are effective in infrastructure development when the government lacks enough funds to do the developments. Currently the government has a lot of pending bills to clear hence it is not in a position to finance such mega projects using the current revenues .Similarly the government debt to foreign nation is at a record high hence more its revenue are used in financing the loan .

WHY THE PROJECT MAY NOT BE ACTUALIZED

 Policy approval

The project is dependent on a bill that has not been approved and is yet to be tabled in the parliament. This bill may be subject to opposition by some parliamentarians and may therefore can be rejected hence discouraging the investors.

 Economic viability in some areas

Some of the proposed dams may be in areas that lack the economic viability to the investors. This is mostly in the areas that have less population making it difficult for the investors to have a limited sale of the water or the energy.

Political Risk

The PPPs model are meant to be financed for a longer period which may be subject to changes in the administration of the governments. The changes in administration may pose a risk to the investors and he may loss his investment if the government in position changes the policy made during the initial agreement.

WHAT ARE THE DISADVANTAGES OF THE PPPs MODEL

1.       Hidden debt

The PPP investment are meant to be paid over a long period of times that is 10 to15 years. This makes the payment to this infrastructure more expensive. If the government financed the projects, it is much cheaper hence in the long run the PPP project expensive and the citizen are forced to pay more using with their taxes.

2.       They may fail to look the welfare

The private investor’s objective to make profit may make this model to consider the welfare of citizen. An example can be cited in the construction of The Nairobi Expressway Road the investors constructed drainage channels directing flood water to the existing road under it which fails to consider the welfare of the users using it. The toll fees may also be made to be expensive discouraging the use of the road by ordinary citizens.

3.       Quick development may lead to development of poor infrastructure

The investors may be tempted to use obsolete raw materials in construction of the project in aim to make profit. This therefore for coordinated regulation by government agencies to ensure the project are done to the required standards.

4.       Corruption deals

PPPs can be used by political class to swindle away the citizens taxes. This evident due to the secretive nature of coming up with these deals. The deals which are mostly done in locked office background may be used to steal the government resources.

5.       Exaggerated price tags

The price tags of private led investment are always exaggerated since the main goal of the investors is to make maximum profit. Notably the construction of Grand Falls Dam was to cost the Kenyan government 150 billion through a Chinese loan. The same project is costing 500 billion to be done by an UK-based private firm.

The construction of dams in Kenya has not been that successful in Kenya .The Kenya Kwanza promise on such a great number of dams may be a huge task but if the government will coordinate and facilitate private investors there might be a success in the prospects and help create employment.

Location: Kenya

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