Project News
Kenya Inks Sh470bn Deal for Mombasa-Nairobi Expressway
The project recently secured initial approval for PPP-based construction.
Kenya has signed a project development agreement with US-based private equity firm Everstrong Capital LLC to build the long-delayed Mombasa-Nairobi Expressway, which has stalled since 2019 due to funding constraints.
The deal that was signed in Washington DC last week, between Everstrong and the Kenya Highways Authority (KeNHA), gives the equity firm and its partners full development rights for what is said to be “Africa’s largest toll road project”.
The 440km Mombasa-Nairobi Expressway, which has been renamed Usahihi Expressway, is expected to cost $3.6 billion (Sh470 billion).
The high-speed road is expected to have 4-6 dual carriage lanes.
According to Everstrong Capital, the expressway is structured as a Public-Private Partnership (PPP) with revenue coming from road users. This relieves the Kenyan government of the burden of sourcing loans to fund the project.
“Usahihi will organize finance, construction, tolling, operation, and maintenance of the expressway under a 30-year concession with construction lasting 3-4 years,” the company said in a press release.
Everstrong Capital further said a significant part of the Sh470 billion investment will come from American development finance institutions, with additional investments coming from Kenyan private sector investors and pension funds.
In December last year, the Mombasa-Nairobi Expressway project secured first-stage government approval for construction under a PPP model.
The project appeared to advance in 2017 when Kenya signed a Sh230 billion deal with American engineering firm Bechtel for the road’s construction.
The signing of the deal would have paved the way for the subsequent stage, which would involve mobilizing finances from export credit agencies in the US.
Four years later, Bechtel rejected Kenya’s offer to have it build the road and recover its costs from charging motorists toll fees, saying the PPP model would cost five times more at Sh2.23 trillion.
However, the Parliamentary Budget Office, later claimed that Bechtel wanted the State to directly fund the project instead of adopting the preferred toll model.
In July 2022, Korean Overseas Infrastructure & Urban Development Corporation Africa (KIND) presented a feasibility study to the Kenyan government for the construction of the road under a PPP model.
RELATED: Koreans to Build ‘Sh1.5 Trillion’ Nairobi-Mombasa Expressway
KIND, which opened its fourth overseas office in Nairobi in July 2017 in pursuit of a share in Kenya’s mega projects, was said to have assumed control of the project.
In the wake of the reports, Bechtel exclusively told the CK that it remained prepared to proceed with the project in “the most fiscally responsible way” to benefit the people of Kenya.
The signing of the new deal comes amidst Kenya’s preference for PPP projects as an alternative to costly project loans. Outstandingly, the Nairobi Expressway stands out as Kenya’s first road constructed within the toll-fee structure.
The 27km elevated highway was built by China Road & Bridge Corporation, using its finances, and the company is expected to oversee the toll expressway’s operations for 27 years before handing over the road to the Kenyan government.
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