The National Treasury has issued an ultimatum to American investors seeking to build the proposed Nairobi–Mombasa Expressway, warning that the project will be abandoned if a revised plan fails to meet the threshold set by the Kenya National Highways Authority (KeNHA).
Everstrong Capital, a US private equity firm, was given a fresh opportunity to actualise the privately initiated project (PIP), which would rank among the largest public-private partnership deals on the continent.
KeNHA restructured Everstrong’s proposal last year to address responsiveness gaps.
The investor must now satisfy KeNHA’s requirements or risk cancellation of the proposal. The highways authority would then open the project to other bidders.
“Everstrong Capital has submitted a revised development report. This is currently under review to determine if it meets the mandatory evaluation criteria,” Treasury Cabinet Secretary John Mbadi said.
“Should the proposal fail to meet requirements, KeNHA reserves the discretionary authority to treat the project as abandoned with finality under Section 43(11)(c) and Section 43(12). If abandoned, the project will transition to standard competitive procurement processes.”
The Treasury’s PPP unit last year directed the investors to prepare a fresh Project Development Report (PDR) demonstrating the bankability of the Sh468 billion project.
The four-lane expressway aims to reduce travel time and costs between Nairobi and the port city of Mombasa.
The PPP Directorate’s latest quarterly update shows the 419-kilometre toll road has been reverted to the feasibility study stage. This follows the PPP Committee’s rejection of the earlier development report for failing to meet revised criteria, including affordability and public interest.
A PDR confirms a project’s viability and affordability and outlines details such as technology, land ownership and environmental impact.
Everstrong has been seeking approval from the PPP Committee, which would allow it to engage KeNHA as the contracting authority and advance the project to the commercial stage ahead of financial close.
Everstrong had proposed acquiring land for a greenfield corridor. KeNHA has since indicated that the project would instead follow the existing Mombasa highway alignment.
Had the project met public interest, PPP suitability, feasibility and affordability thresholds, the committee would have approved procurement under the Act.
Senior government officials cited uncertainty over land use and inadequate financial capacity as key reasons for rejecting the PDR.
The push for a greenfield design requiring extensive land acquisition proved particularly contentious.
Preliminary estimates placed land acquisition costs at Sh12.9 billion, potentially driving up toll charges.
PPP Directorate officials warned that such pass-through costs could make toll rates unsustainable, with projections showing motorists paying between Sh12 and Sh13 per kilometre — or about Sh5,280 for a full Nairobi–Mombasa trip. Heavier commercial vehicles would face higher charges.
