Nairobi-Nakuru-Mau Summit Highway PPP project reach Commercial Close

Andre Kruger October 2, 2020 Case Studies

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25 March 2015: Kenya seeks interest from foreign financiers for PPP projects

The government is seeking interest from foreign financiers for the Mombasa-Nairobi highway expansion PPP project and for the Nairobi – Nakuru road PPP project.

The transaction advisors (TA) have already been appointed for both projects. They will carry out feasibility studies, prepare tendering documents and support the government during the tender process. Intercontinental Consultants and Technocrats (ICT) Ltd of India is TA for the Nairobi-Nakuru highway, while PricewaterhouseCoopers (PwC) will handle the Mombasa-Nairobi highway.

PwC advisory partner Kuria Muchiru stated:

“The appetite to invest in Kenya is there through financing such projects. You may not get the local financial system to fund the level of investment we are talking about here, given our financial system which may not be able to put aside such money for projects with a 30-year lifespan. “It is a young financial system which needs to deepen in terms of long-term financing. We will be looking to interest foreign lenders to these projects.”

The total investment for both projects is estimated at US$1.3 billion.

The Mombasa-Nairobi highway (A109) project involves the expansion of the road into a dual carriageway and the operation of the highway. The A109 road is the main road link between the Kenyan cities of Nairobi and Mombasa. The 470 km highway is a key link to the Mombasa port which is the main gateway to East Africa.

The Nairobi – Nakuru Road (A104) project involves the dualization and operation of the 157 km road which forms part of the Trans-African Highway (Northern Corridor).

The Public Private Partnership Unit (PPPU), established as a Special Purpose Unit within the National Treasury of the Government of Kenya (GOK), has launched a competitive bidding process to seek a private partner for a road project.

The Nairobi – Nakuru Road (A104) project involves the dualization and operation of the 157 km road which forms part of the Trans-African Highway (Northern Corridor).

The process for the project will be conducted to solicit bids in accordance with the procurement rules and procedures for public bidding as set out in the Public Private Partnership Act, No. 15 of 2013.

16 November 2016: RFQ launched for Nairobi-Nakuru-Mau Summit highway PPP

The Bidding Process will consist of two stages: Pre-Qualification Stage and Bid Stage for Pre-Qualified Bidders.

The Kenya National Highways Authority (KeNHA) will conduct a Pre-Qualification Conference of the Prospective Bidders to clarify any part of the RFQ or the Bidding Process and to answer any relevant questions.

Prospective Bidders shall submit their Qualification Documents by January,9 2017.

In March 2015, we reported that the government was seeking interest from foreign financiers for this project and the Mombasa-Nairobi highway expansion PPP project. The total investment for both projects is estimated at US$1.3 billion.

Intercontinental Consultants and Technocrats (ICT) Ltd of India was appointed as transaction advisors (TA) for the project. They will carry out feasibility studies, prepare tendering documents and support the government during the tender process.

20 February 2017: Ten firms express interest to build Nairobi-Nakuru-Mau road PPP

Ten international firms have expressed interest for the construction of the Dualling of Nairobi – Nakuru Road PPP project.

The 10 responded to the request for qualification issued by Kenya National Highways Authority (KeNHA) on 9th November 2016. The Bidding Process consists of two stages: Pre-Qualification Stage and Bid Stage for Pre-Qualified Bidders.

The Nairobi – Nakuru Road (A104) project involves the dualization and operation of the 157 km from Rironi to Mau Summit into a four-lane dual carriageway highway. It will also include the Gitaru- Rironi section, whose reconstruction has just commenced under James Gichuru-Rironi Road Project.

The concession for the road is planned for a period of 30 years. In March 2015, we reported that the government was seeking interest from foreign financiers for this project and the Mombasa-Nairobi highway expansion PPP project. The total investment for both projects is estimated at US$1.3 billion.

The Nairobi- Nakuru-Mau Summit road is part of the Northern Corridor and among the most important roads in the region, transporting most of the westbound cargo from the Port of Mombasa and the Capital Nairobi.

Efficient transportation on the road is anticipated to drastically reduce the cost of transport which will then give rise to huge trade opportunities along the entire corridor.

21 April 2017: Bids submitted for Kenya highway PPP

The Kenya National Highways Authority (Kenha) have shortlisted three firms for the Nairobi-Nakuru-Mau Summit Highway on PPP scheme.

One of the three consortia shortlisted comprises Aiim, Egis, Mota-Engil and Orascom. The second consortium includes Indian and Singaporean firms ITNL International Pte LTd (IIPL) and IL&FS Transportation Networks Limited (ITNL). The third consortium is comprised of Rift Valley Connect, Vinci Highways SAS, Meridian Infrastructure Africa Fund (MIAF) and Vinci Concessions SAS.

The winning consortium will be responsible for the of widening, improvement, operation and maintenance of various sections of highway between Nairobi and Mau Summit. The project, namely includes:

Widening of 175 km of the A8 highway between Rironi and Mau Summit to become a 4 Lane dual carriageway
Strengthening of 57.8 km of the A8-South highway between Rironi and Naivasha; and
Operation and maintenance of 12.43 km of the A8 highway between Gitaru and Rironi and 28.6 km of Nairobi Southern Bypass.

The project will involve an estimated investment of US$550 million.

The main road between Nairobi and Mau Summit is part of the A8 highway and of the Northern Corridor which connects the Port of Mombasa via Nairobi to Malaba at the border with Uganda and onwards to Kampala.

The Northern Corridor is the busiest and most important transport corridor in East and Central Africa, providing a gateway through Kenya from Mombasa Port via road, rail and pipeline to the landlocked countries of Uganda, Rwanda, Burundi, South Sudan and Eastern DR Congo.

24 August 2017: Kenya issues RFP for a PPP highway

The Kenya National Highways Authority (Kenha) have issued a Request For Proposals (RFP) to the shortlisted three firms for the Nairobi-Nakuru-Mau Summit Highway.

Bids are due in February 2018.

The shortlisted consortia are:

Consortium of Mota – Engil (Lead member), Africa Infrastructure Investment Managers Seed Partnership (AIIM), Egis and Orascom.
Consortium of IL&FS Transportation Networks Limited (Lead member) and ITNL International.
SK5+ Consortium, formed by Strabag (Lead member), Kolin Insaat Turizm Sanayi ve Ticaret and Group Five Construction.
Rift Valley Connect, comprised by VINCI Highways (Lead member), VINCI Concessions and Meridiam Infrastructure Africa Fund (MIAF).

The winning consortium will be responsible for the of widening, improvement, operation and maintenance of various sections of highway between Nairobi and Mau Summit. The project, namely includes:

Widening of 175 km of the A8 highway between Rironi and Mau Summit to become a 4 Lane dual carriageway
Strengthening of 57.8 km of the A8-South highway between Rironi and Naivasha; and
Operation and maintenance of 12.43 km of the A8 highway between Gitaru and Rironi and 28.6 km of Nairobi Southern Bypass.

The project will involve an estimated investment of US$550 million.

Intercontinental Consultants and Technocrats (ICT) Ltd of India was appointed as transaction advisors (TA) for the project. They carried out feasibility studies, prepared tendering documents and supported the government during the tender process.

6 March 2019: Two final bids for US$1.8 billion highway PPP in Kenya

The Director-General of Kenya National Highways Authority (KeNHA) has announced that the authority has finalised evaluation of bids to design, finance, construct, operate and maintain the Nairobi-Nakuru-Mau Summit Highway.

Of the four consortia invited to submit proposals for the PPP project, only two submitted final bids. One is comprised of African Infrastructure Investment Managers (AIIM), Egis, Mota-Engil and Orascom. The other contains Vinci Concessions SAS, Vinci Highways SAS, Meridiam Infrastructure Africa Fund.

The project involves the widening of 175 km of the A8 highway between Rironi and Mau Summit to four lanes, operation and maintenance of 12.43 km of the highway between Gitaru and Rironi and 28.6 km of Nairobi Southern Bypass, and the installation of toll collection booths along the highway.

The projected total investment is KES180 billion (US$1.78 billion), an increase from the original KES150 billion (US$1.48 billion) estimate.

13 March 2019: Multimillion Nairobi-Nakuru highway PPP facing legal battle

The Kenya National Highways Authority (KeNHA) has selected the Rift Valley Connect (RVC) consortium – comprising Vinci Highways SAS, Meridian Infrastructure Africa Fund and Vinci Concessions SAS – as the preferred bidder for the Nairobi-Nakuru-Mau Summit Highway PPP project, amidst disputes on the project award process.

The other finalist consortium – African Infrastructure Investment Fund 3 Partnership, Egis Projects S.A, Mota-Engil-Engenharia E Construcao Africa, S.A and Orascom Construction- has appealed the decision of the Kenya National Highways Authority (KeNHA), claiming that the award process of the tender was fraudulent and not transparent. It also claims that Kenha, as the contracting agency, did not provide reasons on why the consortium was not picked as the preferred bidder.

RVC consortium submitted the lowest bid at KES159.5 billion (US$1.6 billion), while Mota-Engil quoted KES194.9 billion (US$1.9 billion). However, according to sources, RVC’s financial proposal understated the income tax obligations to the government by more than KES30 billion (US$300 million).

As we reported in early March, the two consortia were the only two submitting final bids for the project, which involves the widening of 175 km of the A8 highway between Rironi and Mau Summit to four lanes, operation and maintenance of 12.43 km of the highway between Gitaru and Rironi and 28.6 km of Nairobi Southern Bypass, and the installation of toll collection booths along the highway.

2 October 2020: Vinci signs US$1.5 highway PPP in Kenya

The Republic of Kenya, through its Public Private Partnership Unit and the Kenya National Highways Authority (KeNHA), executed an agreement with Rift Valley Highway, a company owned by VINCI Highways(Lead Member), VINCI Concessions, and Meridiam SAS, for the development of the Nairobi-Nakuru-Mau Summit Highway PPP project. The signature occurred in Paris on September 30^th 2020 in the presence of Emmanuel Macron, President of the French Republic, and Uhuru Kenyatta, President of the Republic of Kenya.

The project, worth about EUR1.3 billion (US$1.5 billion), will transform the existing trunk road into a 175-kilometer dual two-lane motorway. Through an availability payment based PPP, Rift Valley Highway will finance, design, widen, upgrade, operate and maintain this road corridor during 30 years. The financial close of the project is expected to occur by the end of 2021.

The construction works, scheduled to last 42 months, will be carried out with a consortium comprised of VINCI Construction subsidiaries: Sogea-Satom, locally rooted in Kenya and VINCI Construction Terrassement, specialized in large infrastructure projects. VINCI Highways, subsidiary of VINCI Concessions, will capitalize on its technical and operational expertise to implement new traffic management patterns, deploy advanced equipment and maintenance plans and provide local employees with training programs.

In one of the strongest economies in Sub Saharan Africa, this highway will improve the road safety and reduce travel time on this strategic axis between Kenya’s capital city Nairobi, Nakuru and Mau Summit. Crossing along the Rift valley, the highway will also serve as a gateway to touristic development.