Kenya has cancelled the contract for the construction of the Nairobi-Nakuru-Mau Summit toll road, citing among other things, high toll fees proposed by the French contractors.
A source at the Kenya National Highways Authority (KeNHA), the procuring agency for the construction of the 233-kilometre highway, told the Business Daily the deal had been terminated with the State planning to issue a fresh tender.
“The government has formally cancelled the tender (for the construction of the Nairobi–Nakuru–Mau Summit Highway). So, they will have to start the [tendering] process again,” said the source who is not allowed to speak on behalf of the agency.
In June last year, the Roads Principal Secretary Joseph Mbugua said the construction of the road had been frozen due to the high user fees, with the State pushing for a review of the multibillion-shilling project.
“We are still in negotiation. It became a bit hard for us to afford, going by the current dynamics. So, we requested them to review their presentation to be able to see whether we can make them affordable,” Mr Mbugua said.
Last Wednesday, Christopher Kirigua, the exiting director-general for the Public Private Partnerships (PPP) at the National Treasury, said the high proposed toll fees were a put-off in the Nairobi-Nakuru-Mau Summit road project, which was aimed at decongesting the main artery from Nairobi to Western Kenya and the neighbouring countries of Uganda, Rwanda and the Democratic Republic of the Congo.
“When we looked at the road (the Mau Summit Road), it was actually going to be the biggest infrastructure transaction in Africa. Unfortunately, that transaction was going to cost the user $6 (Sh800) to drive 175 kilometres in a small car and close to $50 (Sh6,641) for one truck to go 175 kilometres,” he told a panel discussion at the recently concluded 2024 Amcham Business Summit.
Mr Kirigua, who has been dispatched to Washington DC as Kenya’s Deputy Head of Mission, described the proposed toll rates as “unfair.”
He, however, maintained that the project had not yet been cancelled.
“It has not been cancelled yet. Both parties are liable as the concession partner was not able to bring down the costs to make road affordable to users. It will be a mutual agreement for any settlement and hopefully with the least costs as possible to taxpayers,” Mr Kirigua told the Business Daily on Monday.
Since ascending to power in September 2022, President William Ruto’s administration has been having second thoughts about the toll, with his Transport Cabinet Secretary Kipchumba Murkomen saying the road would be built without toll fees.
The termination of the project—which was to be funded from various sources including equity by Vinci Group, loans from the African Development Bank (AfDB), and guarantees from the World Bank — is likely to expose Kenya to litigation and a diplomatic spat with France that backed its firms for the deal.
A consortium of three French firms, which won the tender procured by KeNHA in 2018, indicated that it was ready to break ground on the project having got the financial backing of the AfDB and the World Bank’s International Finance Corporation (IFC).
The consortium, made up of Vinci Highways SAS, Meridian Infrastructure Africa Fund, and Vinci Concessions SAS, was expected to recoup its investments in 30 years by charging toll fees on the road.
The toll fees the contractors of the Nairobi-Nakuru-Mau Summit road project proposed might have informed the financing structure of yet another massive PPP project, the Mombasa-Nairobi Expressway, to be funded by a consortium of financiers led by Everstrong Capital LCC, a US private equity.
“I know globally that is not fair. And actually...I shared this with Ambassador [Kyle] McCarter and told him, if this (the proposed toll rates for the Nairobi-Nakuru-Mau Summit road) is what you are bringing to the table, we have no deal,” Mr Kirigua said.
Mr McCarter is a senior adviser at Everstrong Capital and a former US envoy to Kenya. Mr Kirigua said McCarter and his team had since come up with an “innovative financing” which the government has accepted.
The Treasury revealed that in December 2023 its PPP Committee granted the Mombasa-Nairobi expressway project a first-stage approval, paving the way for fresh progression. The project is now expected to cost approximately $3.6 billion (Sh478 billion).
The construction of the Mombasa-Nairobi Expressway was to begin in 2018, as the US sought to put up a transport network to rival one of the largest Chinese investments in Africa, the standard gauge railway (SGR).
Mr Kirigua said such rates as proposed by French contractors are above the global standards and would not be accepted. In the US, toll rates can be as low as Sh1.66 per kilometre, especially for non-strategic roads. However, on average, motorists pay around 13 cents (Sh17) for every kilometre.
However, motorists using the Nairobi Expressway pay a high toll fee of Sh18.4 per kilometre.
Mr Kirigua said the high charges on the Nairobi Expressway are exceptional because the road also serves Jomo Kenyatta International Airport.
“A lot of users have to pay to get to the airport, so it makes sense (to charge higher toll fees). However, if you go to a very remote village, there is no way people will pay five dollars to use a road. The affordability aspect doesn’t come in,” said Mr Kirigua.
Dr Ruto’s government has also been courting the Chinese investors to take up the construction of the Mau Summit.
