The National Social Security Fund (NSSF) is planning to put Sh25 billion in a Chinese consortium that is targeting to acquire the tender for the construction of the Rironi-Mau Summit highway.
In this plan, NSSF will pay between Sh20 billion and Sh25 billion to acquire half of the consortium with China Road and Bridge Corporation (CRBC). The two will then partner up in funding for the construction of the highway and recoup their investments through tolls once the highway becomes operational.
This mega project is expected to run for 175 kilometres and will cost an estimated Sh170 billion. These funds will be funded through debt at a tune of Sh120 billion with the balance topped up by the consortium.
“The allure of these relatively higher and stable returns is a key motivation behind NSSF’s move into the public-private-partnership (PPP) deal,” NSSF managing trustee David Koros told local media.
“By investing in the highway project, NSSF aims to earn a robust long-term yield that outpaces typical Treasury securities, ultimately boosting returns for pension contributors while fighting with the fund’s risk appetite.”
The project will convert the current highway running from Rironi to Nakuru from a single lane road to a multi-lane highway.
However, this is not the only bid that has been received for the proposed construction of the highway. According to a notice by the Kenya National Highways Authority (KeNHA), Shandong Hi-Speed Road & Bridge Group Co has also placed a bid for the project.
Bidding for the project was reopened after the government cancelled the construction of the highway in April 2024. The cancellation had followed a fallout between the current government and the financiers from France who had been tipped to construct the highway by the government of former President Uhuru Kenyatta.
The French consortium made up of Vinci Highways SAS, Meridian Infrastructure Africa Fund, and Vinci Concessions SAS was set to expand the main highway from Nairobi to western Kenya into a four-lane dual carriageway through a public-private partnership (PPP) model.
Toll fees motorists using Usahihi Expressway will pay per kilometre
Initially, the highway was meant to be used on a toll-basis. Users of the Mau Summit highway were to pay Sh. 6 per kilometre. This would translate to Sh. 1,398 for the entire Rironi-Nakuru-Mau Summit highway.
Under this arrangement, the French consortium operating as Rift Valley Highway Limited was expected to recover its investment and profits in around 30 years. Among the reasons that the current government cited for the tender cancellation included the toll fees that had been proposed for the road.
“The was actually going to be the biggest infrastructure transaction in Africa. Unfortunately, that transaction was going to cost the user Sh. 800 to drive 175 kilo- metres in a small car and close to Sh. 6,641 for one truck to go 175 kilometres,” a representative of the National Treasury had stated.
The project had attracted mega financiers outside of the French consortium. For example, in February 2022, the World Bank through its financing arm International Finance Corporation joined the battle to fund the construction of the expressway.
Through the IFC, the World Bank had become the latest entry to make an expression of interest in the project. Following this expression, the IFC had published the project’s environmental and social impact assessment (ESIA) documents for public review before it commits to funding the road.
Prior to this pitch, the African Development Bank (AfDB) had also expressed interest in funding the mega project. Ironically, in late April 2024, President William Ruto had announced that the commencement of the construction of the road was on course before his government made a U-turn and cancelled the tenders.
“We are well on course to dualling the Nairobi-Nakuru Highway. Before the end of this [2024], we will begin the dualling of the road between Nairobi and Nakuru all the way to Eldoret and possibly to Malaba,” he had publicly said.
