Nairobi-Mombasa Expressway, 473km long, approved

Summary:

• The first-phase approval for the 473-kilometer Nairobi-Mombasa Expressway project, aimed at improving travel times and alleviating congestion, has been granted by the Public-Private-Partnership (PPP) Committee, as disclosed by the National Treasury. The estimated cost of the project is $3.6 billion (Sh555.09 billion). Various companies, including the Korean Overseas Infrastructure and Development Corporation (KIND) and the American firm Bechtel Executive in collaboration with US Capital Investment Company Everstrong Capital, have shown interest in the project. However, there have been disagreements on project financing, toll fees, and land acquisition costs, which have led to complications in the project’s development.

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The first-phase approval for the Nairobi-Mombasa Expressway, a 473-kilometer project aimed at alleviating congestion and improving travel times between the two cities, has been granted by the Public-Private-Partnership (PPP) Committee, as disclosed by the National Treasury. The project, estimated to cost around $3.6 billion (Sh555.09 billion), is now set to advance into the development phase.

The Treasury highlighted the mobilization of private sector resources to enhance crucial trunk networks, specifically mentioning the Mombasa-Nairobi Expressway, which has recently secured initial approval from the PPP committee. The anticipated cost of this project is $3.6 billion. The Nairobi-Mombasa Expressway project, designed to address traffic challenges and slow speeds, attracted interest from various companies, including the Korean Overseas Infrastructure and Development Corporation (KIND) and the American firm Bechtel Executive in collaboration with US Capital Investment Company Everstrong Capital.

In 2018, the estimated cost of the Nairobi-Mombasa Expressway project was approximately Sh300 billion. Bechtel had been selected by the government in 2018, but disagreements on project financing halted the agreement. The Parliamentary Budget Office (PBO) reported in 2021 that Bechtel declined Kenya’s proposal to construct the road and recover costs through toll fees. Bechtel preferred a model where the government pays for the road construction rather than relying on user fees.

The rejection of toll fees would necessitate the government to borrow significant funds, contributing to the rising public debt. Bechtel’s additional request for a virgin land corridor further complicated matters, as the government was reluctant due to the associated high land acquisition costs. Initially, the project envisioned toll charges for motorists. However, a study by the Inter-America Development Bank suggested that toll models are viable for roads with a daily traffic flow exceeding 5,000 vehicles, unless the government provides substantial subsidies.

The PBO emphasized that the Nairobi Expressway section has proven suitable for tolling, while the Mombasa-Nairobi Expressway has presented challenges. Bechtel argued that an Engineering, Procurement, and Construction (EPC) model would offer better value for money compared to the toll model, estimating a fivefold increase in costs to $15 billion (Sh2.23 trillion) and a longer completion timeline for the alternative PPP model where the contractor sources funds independently.

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