Tough Demands for Firms Eyeing Railway City Deals

The government has laid out tough conditions for investors eyeing deals for the construction of a railway city in Nairobi, in a move that threatens to lock out many local companies.

On Wednesday, the government through the State Department for Housing and Urban Development invited bids for a master developer and individual builders to oversee the execution of the proposed 425-acre Nairobi Railway City.

The development is within the Nairobi Railway Station area, which is bound by Haile Selassie Avenue, Uhuru Highway, Bunyala Road, Commercial Street, and Landhies Road.

“The area has been designated as Special Planning Area in line with The Physical and Land Use Planning Act No 13 of 2019 and a project of strategic national importance,” reads the expression of interest (EOI) document from the State Department for Housing.

The government, which owns the bulk of land in the area, is expected to release its acreage to the master developer for the development of the proposed railway city.

The master developer will be responsible for the execution of the project and disposition of sites from planning refinement to the final build-out. The company will oversee site preparation and infrastructure development, financing, marketing and asset management.

Other duties will include outlining the responsibilities of individual developers interested in undertaking specific developments with the Nairobi Railway City precinct.

RELATED: Work Begins on Much-Awaited Nairobi Railway City

On the other hand, developers will be tasked with the implementation of projects for identified precincts and or specific developments to design, build, and finance the city.

This includes the construction of a multimodal transit centre, a railway museum, a 2.4km shopping promenade, and a Meetings Incentives Conferences and Exhibitions Core.

The project will also include the construction of the Nairobi Railway City housing, a research zone, a government office precinct, an international office precinct, as well as a mixed-use centre core offering commercial offices, high-end housing and a grand park and station.

Tough conditions

To qualify for the job, a prospective master developer must demonstrate the ability to finance or obtain financing to implement the railway city and to sustain the development process.

“The master developer will pay for the infrastructure costs to obtain the right to develop a railway city. The pre-qualified respondents will have the option to submit to develop different lots of infrastructure or the entire infrastructure for the city,” reads the EOI notice.

The master developer should also have the ability to undertake extensive planning refinement studies of the existing master plan to address any issues not fully addressed in the current master plan.

On the other hand, the individual developer must demonstrate the ability to finance or obtain financing to commence work on the development within 90 days of signing the contract.

“The financial aspect of funding the development will ultimately be a key factor in choosing the master developer and the respective developers.,” the EOI notice says.

RELATED: Nairobi Railway City Team to Build 20,000 Low-Cost Homes

The developers, who must have undertaken large-scale developments, will be required to demonstrate how financing arrangements for the respective developments were put in place.

Strong linkages

They will also be required to demonstrate strong linkages with international investors with an interest in participating in projects in the railway city and the continent.

The bidders should have an annual turnover of more than Sh10 billion over the last five years and must have the ability to mobile cash or financing amounting to a minimum of Sh7.5 billion at any given time.

Pre-qualification will be based on experience with projects that include all facets of infrastructure design, construction, and financing – with project experience in developing counties, and Africa, being an added advantage.

“However, it is understood that few projects with these characteristics have taken place in developing countries and the level of experience a proposer has to offer may come from developed economies,” reads the EOI document.

The government expects the developers to draw upon staffing from around the world. It also expects teams consisting of consultants contractors and financiers to be assembled.

Foreign companies will be required to comply with the existing laws and regulations in the Republic of Kenya and they must demonstrate how they will transfer their experiences in design, construction, and financing to the railway city project and Kenya.

Interested entities have been given up to August 20, 2020, at 3 pm to submit their bids.

Join 15,000+ pros getting our weekly digest of news and insights.