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Economy

Treasury picks PwC for Mombasa-Nairobi highway expansion

Vehicles heading to Mombasa stuck in traffic at Mazeras. The government plans to expand the Mombasa-Nairobi highway to boost regional trade. PHOTO | FILE
Vehicles heading to Mombasa stuck in traffic at Mazeras. The government plans to expand the Mombasa-Nairobi highway to boost regional trade. PHOTO | FILE 

The Treasury has picked a consortium led by consultancy firm PricewaterhouseCoopers to offer transaction advisory for expansion of the Mombasa-Nairobi highway (A109) into a dual carriageway in yet another move aimed at easing traffic to Mombasa port.

The Public-Private Partnership Unit (PPPU) of the Treasury said the consortium would conduct a feasibility study on the commercial and technical viability of the project to be implemented by the Kenya National Highways Authority (KenHA).

“The proposed project seeks to apply a PPP (public-private partnership) arrangement for the upgrading, capacity expansion and subsequent operation and maintenance of the heavily trafficked highway,” it said.

The 485km Nairobi-Mombasa highway is deemed critical for trade in the region because of its key link to the Mombasa port which is the main gateway to East Africa and also serves markets in South Sudan and the Great Lakes region, handling key goods including fuel, consumer goods and other imports as well as exports of tea and coffee from the region.

The Mombasa port handled a record one million twenty-foot equivalent units (TEUs) of cargo last year, signifying rising trade volumes in the region.

Kenya is also building a second container terminal valued at Sh28 billion in Mombasa to handle increased trade within the region driven by a boom in the construction industry, vast infrastructure development and an emerging middle class.

By 2016, the new terminal is projected to have a capacity of 450,000 TEU and this is expected to rise to 1.2 million by 2019.

The government through the Kenya Ports Authority has already called for bids for a concessionaire to run the first phase of the new container terminal.

Besides the Nairobi-Mombasa highway, the government also plans to expand the 157km Nairobi-Nakuru highway into a dual carriage status under a PPP model to improve the flow of traffic to western Kenya and beyond.

The PPU said a preferred transaction adviser for the Nairobi-Nakuru highway project had been identified and contract would be signed soon.

“Negotiations with preferred bidder are complete. Contract signing and commencement of consultancy service is envisaged in February 2015,” it said.

The infrastructure network is expected to get a boost as the government moves to build, expand and rehabilitate nearly 10,000km of roads under the ambitious annuity financing model.

Under the financing model, contractors are supposed to access loans guaranteed by the State from banks, enabling them to design, build and maintain the roads.

The Treasury then repays the loans in equal instalments (annuity) over eight years, starting from the time the road section is completed. The projects are expected to be completed by 2017.

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