Taxpayers are staring at multi-billion-shilling losses after a fresh audit revealed deep financial leakages, prolonged project delays, and repeated contract violations across major road developments handled by the Kenya National Highways Authority and the Kenya Urban Roads Authority, with stalled works and unpaid contractors driving up avoidable costs.
Auditor General Nancy Gathungu, in a report for the period ending June 30, 2025, details how weak management of pending bills, delayed payments, and irregular contract variations has pushed avoidable losses beyond Sh7 billion.
The report further shows that interest charges alone have surpassed Sh2 billion, much of it linked to long-standing arrears that in some cases date back more than a decade.
The audit highlights that failure to settle contractors on time has triggered penalties and accumulated interest that could have been avoided. It also raises concern over projects whose contracts were altered beyond permitted legal limits, leading to inflated costs and delayed completion timelines.
One of the major flagged projects is the Nairobi Intelligent Transportation System, where a contractor received Sh1.4 billion in January 2025 but had not mobilised to the site. An inspection conducted in October 2025 found that the project was still stuck at the design stage.
A consulting firm engaged in May 2022 and already paid Sh257 million is supervising the project. Despite a 27-month extension granted due to delays, no physical works had begun at the time of the audit. The consultant indicated that delays were partly caused by the absence of a qualified project manager on the contractor’s side.
“The delayed project implementation has negatively impacted service delivery to the public and value for money incurred could not be confirmed.”
The Kenol–Sagaga–Marua dualling project is also under scrutiny after its cost rose from Sh6.1 billion to Sh9.1 billion, an increase of about 50 per cent. The Auditor General says this exceeds the legal limit of 25 per cent allowed for contract variations, making the adjustment irregular and exposing public funds to risk. Continued delays are expected to push costs even higher.
“The delayed completion of the project denied the public the benefits that could have accrued from it,” she said, noting that part of the interest charges could have been avoided.
Another troubled project is the Kibwezi–Mutomo–Kitui road, which has remained incomplete since 2011. Works stalled in December 2021 after the contractor left the site due to unpaid bills, with outstanding amounts now at Sh1.9 billion, including Sh474 million in interest charges.
KeNHA later negotiated a waiver of Sh255 million in interest, but the audit shows that underlying payment issues persisted. By September 2025, the contractor had only recently resumed work, with no clear completion timeline provided.
The report concludes that persistent delays, unpaid bills, and unchecked contract changes continue to inflate costs while leaving key infrastructure projects unfinished across the country.