Get the toll charges on Nairobi Expressway rightTuesday January 05 2021
The pricing model adopted on the Nairobi Expressway, with toll fees based on inflation and the dollar exchange rate, may set the project up for failure.
The government has allowed China Road and Bridge Construction (CRBC) to review the set base toll rates, forecast to generate Sh302.5 billion revenues, which will offer the Chinese firm an annual profit of Sh3.9 billion.
Each driver on the Nairobi Expressway will be required to pay a fee of between Sh100 and Sh1,550, depending on the size of the car and distance travelled, but the charges will fluctuate to cushion the Chinese operator from exchange rate losses.
This infrastructure financing model for road construction that both avoids adding to already high debt levels in Kenya while reducing risk for creditors mirrors changes taking place in Mozambique and Uganda.
While private sector investment is essential for the construction of good roads on the continent, not everyone agrees that tolling is the most economically sensible solution.
The projections and decisions on pricing and demand should be tested on the basis that a huge part of the population is poor and middle-class, meaning that overpricing the toll expressway may leave it underutilised.
High toll charges will make the expressway the preserve of the rich, which means few users. It may go the way of the standard gauge railway (SGR) which is struggling to lure cargo transporters, who ought to be making enough money for it to repay the loans.
The tolling principle should ideally ensure maximum flow of traffic and pay for the road but still, make it worthwhile for a motorist.
Tolled roads should have a significant impact reducing traffic jams, and excessive pricing should not deter this.
Let the government and CRBC ensure the pricing concept is right from the start because this will act as a benchmark for other projects that can foster stronger transport and trade links.
This should not be another textbook case of turning a good thing, of providing a faster and more predictable travel option, into a white elephant.
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