Kenya Abandons US Firm, Eyes 4-Lane Nairobi-Mombasa Highway

Kenya’s Nairobi-Mombasa Highway to Be Expanded with Toll System

The Kenyan government has announced plans to expand the existing Nairobi-Mombasa highway into a four-lane toll road, marking a significant shift in infrastructure development strategy. This decision comes after the rejection of an earlier proposal by a US-based investor, Everstrong Capital, which had aimed to construct a new expressway. The new initiative focuses on upgrading the current corridor rather than building a separate route.

Project Overview and Objectives

According to a recent report from the Treasury’s Public-Private Partnerships (PPP) Directorate, the project involves enhancing the 461 km Mombasa-Nairobi (A8) Road. The expansion will increase the number of lanes from two to at least four, transforming it into an access-controlled tolled road. The plan also includes cost-effective design solutions to minimize disruption to local connectivity.

The redesigned project represents a major policy change from the previous proposal by Everstrong Capital, which had proposed a greenfield expressway. This alternative was estimated to cost Sh468 billion and would have required acquiring thousands of acres of land. However, the PPP Committee rejected this idea in July 2023, directing KeNHA to consider restructuring the project as an expansion of the existing highway instead of creating a new one.

Reasons for Rejection

The committee found that the original proposal did not meet the requirements of the Public-Private Partnerships Act due to weaknesses in its financial structure, technical capacity, and overall viability. One of the main concerns was the reliance on a greenfield alignment, which would have necessitated extensive land acquisition. Officials warned that the high cost of land could lead to increased toll charges, making the project both commercially and politically challenging.

Additionally, the government declined to grant several policy concessions sought by Everstrong, including mandatory usage of the toll road by heavy commercial vehicles and long-distance buses. The company argued that trucks would account for about three-quarters of toll income, making mandatory usage critical for attracting financiers.

Challenges and Setbacks

Everstrong faced further setbacks when Portuguese engineering firm Mota-Engil, part-owned by a Chinese firm, withdrew from the consortium. Mota-Engil, known for its global projects, had been expected to provide construction expertise and a substantial equity contribution. Its exit followed objections from US financiers over the firm’s Chinese links.

Without Mota-Engil, the PPP Committee found that Everstrong failed to demonstrate sufficient financial capacity or replace the contractor with another partner. The investor then sought to bring in alternative contractors, including India’s Larsen & Toubro, South Korea’s Samsung, Turkey’s IC Holding, and Italy’s Webuild, but the restructuring came too late to satisfy the committee.

Legal Challenge and Final Decision

Everstrong challenged the government’s decision before the Public Private Partnership Petition Committee, arguing that state agencies had acted unfairly after encouraging it to continue developing the proposal. However, in April this year, the tribunal dismissed the petition, ruling that the company had failed to demonstrate adequate financial muscle, technical capability, and overall project viability.

The seven-member tribunal found that participation in the PPP process did not create a legitimate expectation that the proposal would ultimately be approved. It upheld the government’s decision to reject the project.

New Procurement Process

Following the ruling, the government formally restarted the procurement process under a redesigned model centered on upgrading the existing highway. According to the PPP Directorate, procurement for the transaction advisor was launched on March 10, and bids closed on May 8. Evaluation of the submissions is now underway.

The transaction advisor will help determine the project’s technical configuration, commercial structure, financing model, and procurement strategy before the government invites bids from private investors.

Benefits of the Brownfield Approach

Unlike the previous proposal, the redesigned highway will largely utilize the existing transport corridor, reducing land acquisition requirements while preserving local connectivity through carefully designed interchanges, service roads, and controlled access points. The government believes this approach will significantly lower project costs, reduce delays associated with compulsory land acquisition, and minimize speculative land buying that has plagued previous infrastructure projects.

The Nairobi-Mombasa highway forms part of the Northern Corridor linking the Port of Mombasa with Nairobi and neighboring countries, including Uganda, Rwanda, Burundi, South Sudan, and the eastern Democratic Republic of Congo. “The road section is therefore of major economic importance as it promotes trade and tourism through transportation of goods, merchandise and people,” the PPP Directorate said.

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