Money and a the exit of a prominent contractor were the main reasons why the multi-billion Nairobi-Mombasa expressway project collapsed. This has emerged after a determination by the National Treasury’s public private partnership committee that the project ill-conceived and unsustainable and ought to be terminated.
Apparently, Portuguese construction giant Mota-Engil had been roped into the project by American firm Everstrong Capital. The firm was to come in as the main technical and financial partner. However, the company pulled out of the joint venture triggering a disintegration that has now resulted in the total cancelation of the project.
“When [Everstrong Capital / Usahihi Expressway Limited] went to the development phase, they came back with other contractors to meet the technical capacity but the shareholder to replace Mota-Engil was not there,” the PPP Directorate-General Kefa Seda told local media.
A spot check on Mota-Engil shows that the multinational construction firm has footprint in major projects spanning from railways, airports, and motorways. For instance, the company is currently undertaking the The Cuapiaxtla-Cuacnopalan highway is a concessioned road that strategically connects the center of the country with the southeast, facilitating transit between Puebla and Oaxaca in South-Central Mexico.
With a rich portfolio of accomplished projects and an international presence, Everstrong was banking hugely on this company to inject investor confidence into the project.
The exit left the American firm with huge technical and financial gap that had not been sealed by the time the project’s plan was presented to the Treasury’s PPP committee. To compound this, the National Treasury was allegedly cautious that Everstrong’s preference for a greenfield venture in which land would need to be purchased along the construction corridor and the estimated cost of around Sh12.9 billion passed to road users in the form of tolls would make the expressway unaffordable.
The Kenya National Highways Authority (KeNHA) signed an agreement with Everstrong Capital for the construction of the expressway during President William Ruto’s visit to the United States in May 2024.
Had it been implemented and completed, Everstrong and their partners would have charged toll fees for a period of 30 years, by which time they would have been expected to have recovered their investment plus profit.
Initially, the Nairobi-Mombasa expressway was to be constructed by American construction company Betchel. In 2018 when the construction plans were hatched, the project was estimated at Sh300 billion.
However, this agreement did not go through following disagreements between Betchel and the government on how it would be funded. The government of Kenya had asked Bechtel to build the road using its own money then charge Kenyan motorists toll fees up until the money and profit is recovered.
Kenya ditches US firm Betchel in construction of 482km Nairobi-Mombasa Expressway
Betchel rejected this proposal and asked the State to pay it upfront for the construction. Bechtel had then argued that the alternative PPP model where the contractor sources for funds would cost five times more at $15 billion (Sh1.9 trillion) and take much longer to complete.
Bechtel had estimated that construction of the expressway will create 500 jobs and involve local businesses supplying up to 100,000 tonnes of cement and 40,000 tonnes of steel. When completed, it was estimated that the mega highway would not only ease congestion, but would also cut travel time between the two cities from the current 10 to about four hours.
