Truckers face mandatory use of planned Sh352b Mombasa-Nairobi Expressway

Plans for the "Usahihi" Expressway project, a 440-kilometre four-lane dual carriageway linking Nairobi and Mombasa, are taking shape. Heavy commercial vehicles could be compelled to use the planned Nairobi-Mombasa Expressway, where motorists will have to pay tolls to use the road. This is meant to ease congestion on the existing highway, address safety issues that the road has faced over the years, and reduce wear and tear. Construction of the Sh352 billion 440-kilometre dual carriage road, which has been branded Usahihi Expressway, is expected to begin by the end of this year and take four years to complete. The road, which will be built using private capital, is expected to reduce travel time between Nairobi and the coastal city of Mombasa to about four and a half hours from the current 10 and a half hours. It will be the second such major road project following the 27-kilometre Nairobi Expressway, which was designed, financed and built by China Road and Bridge Corporation (CRBC). READ: US firm gets Sh452b Mombasa-Nairobi expressway plan rolling The Chinese firm operates the road through its Moja Expressway subsidiary in a 30-year concession, which ends in 2049. The requirement for commercial vehicles to use the Nairobi-Mombasa Expressway when it becomes operational could elicit strong reactions from transporters and cargo owners, who might face higher charges in moving cargo from the port city to Nairobi and further into the region. These costs are likely to be passed on to consumers. It could, however, eliminate some of the barriers that truckers face when transporting cargo on the existing road, including roadblocks besides helping them save on fuel and time. Philip Dyk, partner at Everstrong Capital - the firm that has the 30-year concession to build the road and operate it - said yesterday there will be a requirement for heavy commercial vehicles to use the planned road once it is completed. This is expected to improve safety on the current road that is currently characterised by major accidents but also reduce its wear and tear, saving the government regular maintenance costs. "The heavy vehicles, which cause a lot of wear and tear on roads, will be required to use the new road. The reason for that is that it will be designed to handle the heavy weight," he said, adding that the firm has had preliminary engagements with some of the transporters and cargo owners, who are in support of the project. "We have talked in detail with some of the stakeholders who take the containers from Mombasa and we are talking to more. During these sessions, as we get into the analysis of the project they are very supportive of what we are trying to do. They recognise that even if they are going to pay tolls, their economic result will be better because they will save time, save fuel and will have a much more predictable schedule by using the road." Everstrong expects three-quarters of its revenues to come from heavy commercial vehicles. "What this project will do is to maximise the value, especially for those driving trucks and transporting trailers from Mombasa to Nairobi. That will be about 75 per cent of the revenue for this road," said Kyle Mccarter, a former US senator who also served as US Ambassador to Kenya during President Donald Trump's first term and is now the Chairman of Usahihi Expressway Ltd. "We need a safe road for the heavy commercial vehicles because we also need a safe road for other road users. We know the existing road has had all kinds of challenges in terms of safety. You need 10 hours to go from Nairobi to Mombasa, we will be going for four and a half hours safely." Mr Mccarter, who has been a proponent of African countries reducing reliance on aid and instead trade with other regions on an equal footing, now noted that "Usahihi exemplifies my belief that Africa must transition from aid to trade on the path to self-reliance." "The government of Kenya is not taking any debt on this. This is a true PPP (Public-Private Partnership) 30-year asset," he said. "The rate of return for this project for equity is 17.5 per cent, which is a reasonable rate of return, while we are working to drive down the toll for people who will use the road." The road is projected to cost $3.5 billion (Sh452 billion). About $1 billion (Sh129 billion) will be sourced from local investors, including pension funds and even retail investors. Everstrong expects to reach financial close by the third quarter of this year and start construction by the end of the year. "Our goal is to complete the financing by the third quarter of this year. The next stage will be to break ground, which we expect to do by the end of this year. The construction phase will be three to four years," said Mr Dyk. The firm will then operate it for another 26 years, charging the road users to recoup investments and eventually hand it over to the government after the lapse of the 30-year concession. ALSO READ: Fresh concerns by the US stall Sh300b Mombasa-Nairobi expressway Dyk said while the toll rate is yet to be settled, the per-kilometre charge would be much lower than what motorists pay to use the Nairobi Expressway. Everstrong on Thursday signed a transaction advisory and placement services agreement with CPF Capital and Advisory, a subsidiary of CPF Group, which will now lead in raising funds for the project locally. CPF, alongside its partners Pack Hunters Club (a consortium of financial institutions including pension funds, fund managers, investment banks, insurers and banks), will raise Sh129 billion to finance the project. CPF noted that this marked a significant milestone in Kenya's infrastructure investment landscape, a departure from the past where capital to put up mega projects almost always came from foreign investors. CPF and its partners will raise funds through the local capital markets, in what it said would be a precedent for the local infrastructure financing in Kenya and the region. "This issuance will be the largest of its kind, underscoring the strength and depth of Kenya's capital markets," said the CPF Group Managing Director Dr Hosea Kili.

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