Infrastructure News

07/24/2020

Kenya plans US$ 1.85 bn toll roads PPPs

The Treasury of Kenya has announced plans to launch PPP infrastructure projects such as toll roads with an estimated investment value of KES 200 billion (US$ 1.85 billion). The government is also revitalizing the PPP framework to have an alternative channel to finance infrastructure in times of fast-rising public debt.

The news was announced last week at the annual East African Community (EAC) budget day, when the Government of Kenya, among other nations, has announced its 2020/2021 budget.

The government plans to attract PPP financing by 2020/21 by amending the PPP Act to remove unnecessary barriers, helping to reduce the burden placed on government by ambitious infrastructure plans. Treasury Cabinet Secretary Ukur Yatani said the government is reworking the PPP framework to allow for the introduction of toll fees for use of major highways.

The Kenyan Government is turning to tolls to finance road projects to avoid taking out new loans. Private partners will finance, build and operate at least five toll roads across the country. The most prominent projects are Nairobi-Nakuru-Mau Summit highway that will cost KES 180 billion (USD 1.68 billion) and JKIA-Westlands expressway with an investment value of KES 60 billion (US$ 550 million), the proposed Nairobi-Mombasa Expressway, Nairobi Southern Bypass, Thika Superhighway, and a second Nyali bridge that will connect Mombasa Island to the mainland.

The projects are proposed to be built on a PPP model with a term of 15-20 years.

The government already has a bill that seeks to revive the 15 toll stations that previously saw motorists pay to use major highways such as the Nairobi-Nakuru, Nairobi-Mombasa, Nairobi-Thika, Kisumu-Busia, Nakuru-Nyahururu and Ahero-Kisii roads.

“The government through this arrangement targets mobilising approximately KES 200 billion (US$ 1.85 billion) in the 2020/21 fiscal year by concluding the financing of several projects that are currently at an advanced stage of negotiations. These projects are drawn from among others the transport, energy, health, housing and manufacturing sectors of the economy,” said Mr Yatani.

The previous efforts to roll out PPP projects have not been successful due to investor fears over the guarantee of returns. The toll stations that were established in Kenya in 1980s had to be removed in the 1990s due to corruption at the toll stations.