Uganda expects to pick the winning bidder by the end of 2019 to build and operate a $1.5 billion road project under a public private partnership (PPP) model, a senior official said on Tuesday.
The planned 95-km (60-mile) highway will connect the capital Kampala with Jinja, an industrial town in the east of Uganda.
The road forms part of a broader transport artery linking the Kenyan coast to landlocked Uganda, Rwanda, Burundi and South Sudan, as well as the eastern Democratic Republic of Congo.
Patrick Muleme, head of design at state-run Uganda National Roads Authority (UNRA), told Reuters the motorway was the first road in Uganda being implemented using a PPP model.
The contractor will design, build and operate the road for 30 years, earning profits by charging tolls before handing it back to the state.
Analysts have said projects relying on PPP financing have often stumbled in the regional in the past over government guarantees and revenue sharing arrangements.
“We expect that by end of the year we will have selected the final preferred bidder,” Muleme said, adding that work would be expected to start in 2020.
UNRA short-listed four joint bids last month including one led by German-based Strabag AG and another led by China’s Communications Construction Company (CCCC).
Muleme said construction would cost about $1 billion, with the contractor raising $600 million and the government contributing $400 million. A further $500 million would be needed to cover land acquisition, debt financing and operating costs, he said.
The World Bank is the project’s transaction adviser.
“We’re coming up with a number of similar expressways where we think a similar model might work,” Muleme said, adding that two more planned roads using the PPP model were being studied.
He said projects using the PPP model were planned in Kenya and Tanzania, while he said others had successfully worked in other parts of Africa including South Africa and Senegal.