Kenya, US firm to begin talks on $3bn expressway

Kenya will begin formal talks next week with the United States construction giant, Bechtel Corporation, over the financing model for the proposed Ksh300bn ($3bn) Nairobi-Mombasa expressway.

While the government wants the funds needed to build the 473-kilometer road taken by the US company to recover its investment and a margin by charging tolls, the latter pushes Kenya to take out a loan for the project.

Bechtel Corporation says the public-private partnership model (PPP), preferred by the government, will cost taxpayers up to 500 billion KSH ($5bn) over 25 years.

Treasury Secretary Henry Rotich said the two parties will now hold discussions from next Monday to agree on the best financing framework for the project.

“Bechtel team will be coming from 9th July to have a detailed discussion with us (Treasury) and other agencies. They have already done some work and we have agreed to continue that discussion,” Mr. Rotich said.

“We will commence detailed discussion on how the financing approach will be undertaken under that project. We will be discussing modalities, financing structuring and the details for us to be clear on how to undertake this project.”

The four-lane dual carriage is expected to reduce congestion on the main road linking the port of Mombasa to Nairobi by facilitating an uninterrupted movement of vehicles at speeds of up to 120 kilometers per hour.

Bechtel signed an agreement with the Kenya National Highways Authority (KeNHA) to design, build and operate the highway – which will have interchanges to allow entry and exit – last August.

The decision to build the main road followed a recommendation from the consulting firm PricewaterhouseCoopers (PwC), mandated to carry out the feasibility study in February 2015.

Transport and Infrastructure secretary James Macharia said in May funding the road under the PPP model as opposed to public debt will ease the debt repayment pressure on taxpayers.