STALLED

Mombasa - Nairobi expressway project cost inflated by 67%

Construction of the mega project was set to begin last year

In Summary

• Questions on the cost remain unanswered where the project is said to have been inflate by 66.7 per cent.

• US Embassy in Nairobi says the contracted company-Bechtel is subject to the country’s Foreign Corrupt Practices Act which must ensure business is conducted without graft.

Image of the said Nairobi-Mombasa expressway
Image of the said Nairobi-Mombasa expressway
Image: COURTESY

Kenyans will have to wait longer for the planned 485-kilometre Mombasa-Nairobi Expressway as financing and construction of the project continue to delay close to four years since its conception.

The mega project whose ground breaking was set for last year, before being pushed to January this year and later to June, is yet to kick-off , rising questions over its viability.

Among major hiccups on the US–backed project now appears to be financing as corruption comes back to haunt the country.

 
 

Questions on the cost remain unanswered where according to insiders familiar with the project, the Kenyan authorities–Transport Ministry and the Kenya National Highways Authority(KeNHA) had inflated the cost by 66.7 per cent, from an estimated cost of US$1.8billion(Sh185.7billion) to US$3billion(US$309.5billion).

This raised eyebrows leading to the US government temporarily halting the project to be implemented by American construction company-Bechtel International.

Bechtel is subject to the Foreign Corrupt Practices Act, which means Kenya has the U.S. Department of Justice on its team to ensure business is conducted without the graft that blocks Kenya’s prosperity
 US Embassy in Nairobi

Bechtel provided a formal offer in October 2016 and since then, KeNHA has been in discussions with the contractor which was concluded in July 2017, and the commercial contract signed on August 5, 2017.

Construction was set to commence in 2018, according to KeNHA, which had expected to have the first section opened by end of this year.

In May this year, US ambassador to Kenya Kyle McCarter said his government was scrutinising the proposal to establish if it offered value for money for Kenyans, especially a time when the country is struggling with a ballooning debt.

 “We are still working on the finance. Kenya has a challenge of debt and we are wary of burdening Kenyans,” the Envoy said in an interview in May.

 
 

According to the envoy, the US is keen not to commit to a project whose cost would turn out to be “three to four times higher than the actual”, saying the Trump administration wants to ensure there is an honest return on investment for Kenyans.

 “At a cost half the price of rail and roads previously built, the highway will be built in segments, leveraging private investors to minimise government debt,” McCarter wrote in a recent opinion piece.

Central Bank of Kenya (CBK) data shows total public debt (both domestic and foreign) stood at Sh5.809 trillion as of June 19, up from Sh5.607 trillion same time in May.

The Star has also established the Environmental Impact Assessment on the project was never completed despite having been established in 2018.

There is also no detailed design on the project despite a stakeholders engagement on affected persons being conducted, meaning the process has to begin afresh despite hundreds of thousands having already been spent on the initial stages.

“Fresh consultations will be required which will inform compensation for affected persons. Currently we cannot even say who will be affected because the route has not been decided,” a source within government, who sought anonymity due to the sensitivity of the matter, told the Star.

KeNHA which is the contractor however insists there is land for the project.

“Land had been identified along the old alignment but issues arose over bringing down a lot of facilities along the road. We have now found land fully off Mombasa road,” director general Peter Mundinia told the Star.

He said the government is however looking to undertake the project as a Public-Private Partnership to avoid piling up public debt.

“After the whole issue of saying the debt is too high, we now have to approach the project as a PPP rather than the government borrowing more with our already burgeoning debt,” Mundinia said.

 The Transport Ministry has  also distanced itself from the US$3billion cost placed on the multi-billion highway with CS James Macharia insisting the country has no contractual commitment to the project, hence no costs can be linked to the project.

 “How can we talk about figures for a non existent transaction?,” CS Macharia paused to an inquiry by the Star on the costing of the project to be funded by the US Exim Bank.

His ministry remains among the most affected in abandoned state projects where according to a recent National Treasury report tabled in Parliament, there were 545 stalled government projects worth Sh365.9 billion as at June 2018, despite contractors pocketing billions.

The State Department for Transport accounts for Sh79.1 billion worth of abandoned projects, the Treasury report tabled in February revealed, among them being the abandoned Green Field Terminal at Jomo Kenyatta International Airport.

According to the Treasury report dubbed “Stalled Capital Projects”, Sh72.5 billion had already gone onto funding the projects.

The Express way project got a major boost after President Donald  Trump and President Uhuru Kenyatta committed to seeing the it  move forward at their meeting in the Oval Office in August last year.

The latest update from the embassy now suggests Kenyans will have to be patient with the project as corruption concerns are addressed.

Bechtel is contracted to build the project estimated to create 500 jobs and involve local businesses supplying up to 100,000 tonnes of cement and 40,000 tonnes of steel.

 “We look forward to a successful conclusion to the benefit of both Kenyans and Americans. The Bechtel proposal is a clear example of the benefits of the U.S. model of investment, focusing on sustainable financing, hiring Kenyans to manage, lead, and do the skilled work, and providing international standards at lower cost with a strong return on investment for Kenya,” the Embassy told the Star.

The expressway is designed to have consistent high speed lanes of up to 120 kilometres per hour, reducing the journey between Mombasa and Nairobi to about four hours from eight.