Kenya has decided to terminate a €1.3bn road-building contract with a consortium led by French contractor Vinci Highways and is expected to give it to an unnamed Chinese company, Reuters reports.
The public-private deal will turn a 140km single-lane road into a dual carriageway linking Nairobi to the Rift Valley city of Nakuru and Mau Summit.
It was signed in Paris in 2020 by Uhuru Kenyatta, the president at the time, with a team that also contained finance company Meridiam and Vinci Concessions.
The Vinci team were to have designed, financed, built, operated and maintained the highway under a 30-year concession, recovering its investment through tolls.
Kenya later sought to renegotiate the deal because the Kenya National Highways Authority (KeNHA) worried that the government bore too much risk if traffic projections were too optimistic.
KeNHA told Reuters that it had requested a restructuring of the contract, but Vinci said the change in terms would make the project unviable. After the talks reached an impasse, KeNHA issued a notice of termination.
A source told the Kenyan People’s Daily: “We reviewed the risk distribution and it was not tenable. The government was exposed to too much downside in case of low traffic volumes.”
The fears were accentuated by the expected cost of the toll – between $6 and $50 – which the government thought would be unaffordable for many users.
According to sources with knowledge of the matter, Nairobi is planning to offer the project to a Chinese company. The People’s Daily reports that the government is “in the process of onboarding” the contractor.
The onboarding has been under way for some time: in November, the South China Morning Post reported that Nairobi was looking to make the switch and that talks were “at an advanced stage” with a Chinese construction company (see further reading).
John Mbadi, Kenya’s finance minister, led a team of officials to Beijing this month, where they met their opposite numbers. President William Ruto will be following up with a state visit later this month to conclude whatever agreements were negotiated.
The project is viewed as a priority by Kenya. Ruto recently pledged that construction would begin in 2025. The single lane road is the main connection between Nairobi and the north of the country. About 20,000 vehicles use it a day.
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