Kenya Facing China As It Cancels Ksh 190B Highway Contract With France
Kenya is in the process of onboarding a Chinese contractor for the 140 kilometer Nairobi-Nakuru-Mau Summit highway after terminating its agreement with a French consortium.
The move comes amid renewed scrutiny of Public-Private Partnership models and government projects that are a financial risk to the taxpayer.
The Ksh 190B dual carriageway project was initially awarded in 2020 to the Rift Valley Highway consortium, comprising France’s VINCI Highways SAS, VINCI Concessions SAS, and Meridiam Infrastructure Africa Fund.
The group had signed on to design, finance, build, operate, and maintain the highway under a 30-year PPP model, recovering investment through toll revenues.
Kenya National Highways Authority (KeNHA), the agency overseeing the project, sought to restructure the contract terms, citing clauses that placed the financial burden of traffic shortfalls squarely on the government.
The proposed restructuring was ultimately deemed unbankable, prompting the termination of the agreement. “We reviewed the risk distribution and it was not tenable,” said KeNHA which was familiar with the negotiations. “The government was exposed to too much downside in case of low traffic volumes.”
Under the original model, motorists were expected to pay between Sh800 and Sh6,600 depending on vehicle type to use the tolled highway. The tolling structure raised eyebrows within policy circles and among road users, who feared the road would become unaffordable for regular use.
With the French deal out of the window, Kenya is now in talks with a Chinese firm to implement the project under revised PPP terms. The new arrangement is expected to place more risk on the contractor while reducing the government’s exposure to contingent liabilities.
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