Narrative
Full Description
Project narrative
In September 2018, China Road and Bridge Corporation (CRBC) was invited to develop the Nairobi JKIA–James Gichuru Expressway Project during 2018 FOCAC Summit in Beijing. Two months later, in November 2018, CRBC undertook a project feasibility study. It then completed a technical proposal in January 2019 and a financial proposal in March 2019. Then, in April 2019, the Kenyan Government awarded a contract to CRBC for the Nairobi JKIA–James Gichuru Expressway Project. A project agreement was signed on June 30, 2019. Then, on October 15, 2019, CRBC and Kenya National Highways Authority (KeNHA) signed a a 30-year concession agreement. The total cost of the Nairobi JKIA–James Gichuru Expressway Project is RMB 4.602 billion ($668 million). It is being implemented on a Public-Private Partnership (PPP) and Build-Own-Operate-Transfer (BOOT) basis and financed according to a debt-to-equity ratio of approximately 75:25. On October 18, 2023, Moja Expressway Company Limited — a special purpose vehicle and wholly owned subsidiary of CRBC — signed a loan (facility) agreement worth $494 million with China Development Bank (CDB) and China Eximbank. The estimated borrowing terms of the loan are as follows: a 15-year maturity, a 3-year estimated grace period, and a 7% estimated interest rate. China Road and Bridge Engineering Co., Ltd. (中国路桥工程有限) and CCCC International (Hong Kong) Holdings Limited (中交国际(香港)控股有限) also agreed to make equity contributions of $133.6 million and $33.4 million, respectively, to Moja Expressway Company Limited in order to support the implementation of project. The Nairobi JKIA–James Gichuru Expressway Project involves the development, operation and maintenance of an expressway between Jomo Kenyatta International Airport (JKIA) and James Gichuru Road. The 27.1 km expressway -- with 18.2 km on the ground and 8.9 km elevated -- runs from JKIA to James Gichuru road (Westlands Redhill Road Link). It connects Mlolongo town in Machakos County with James Gichuru Road along the median strip of the A8 National Road. The 4-lane dual carriageway has 11 interchanges at Mlolongo, Standard Gauge Railway, Jomo Kenyatta International Airport, Eastern Bypass, Southern Bypass, Capital Centre, Haile Selassie Avenue, Museum Hill, Westlands, and James Gichuru Road. It was to built to a Class A standard with a design speed of 80 km per hour. The expressway relies on a closed toll system with 27 toll gates located at two main road points and nine interchanges. The Nairobi JKIA–James Gichuru Road Expressway Project was subjected to an ex ante environmental impact assessment (EIA). The project team hired a local consultancy specializing in EIA for environmental management advice and monthly impact assessments. The team collected, translated, and studied Kenyan laws and regulations on environmental protection. It also adhered to Kenya's Law on Environmental Impact Assessment and sought to minimize the project's impact on the local ecosystem. The toll plazas and ramp in downtown Nairobi were originally routed across a century-old fig tree, but to avoid adverse impacts to the ancient tree, the project team rerouted the expressway to preserve the tree. CRBC is the contractor responsible for project implementation. Construction commenced on May 4, 2019. However, a formal groundbreaking ceremony did not take place until October 16, 2019. As of July 2021 the project had achieved a 60% completion rate. By November 8, 2021, it had achieved a 75% completion rate. A main line beam erection ceremony was held on December 23, 2021 and attended by the Kenyan President, the Kenyan Minister of Transport, and the Chinese Ambassador to Kenya. By December 2021, the project had achieved a 94% completion rate. As of April 2022, it had achieved a 95% completion rate. During the construction phase, this project reportedly employed 4,000 workers. The expressway was originally scheduled to be opened to traffic on June 30, 2022. It was opened to traffic on a trial basis on May 14, 2022. However, it was not officially put into operation until July 31, 2022. Upon project completion, travel time from the airport to the downtown area was reduced from 2 hours to 20 minutes, and the maximum daily traffic flow reached 63,000 vehicles. An electronic toll system (ETC) was introduced for the first time in Kenya's history and the share of ETC users increased sharply -- from 26.8% to 70% -- after the expressway went into operation. Under the terms of its 30-year concession (BOOT) agreement (with a 3 year construction period and 27 year operation period), CRBC is responsible for transferring the Nairobi JKIA–James Gichuru Expressway back to KENHA in 2049 and it is expected to repay its loan (and recoup its equity investment) by collecting toll revenues. Once operational, each driver on the expressway will be required to pay a toll of between 109.4 and 1,641 Kenyan shillings (between $1 and $15), depending on the size of the car and the distance traveled. Over the course of the 30-year concession period, the project is expected to generate $2.765 billion. The project has been disclosed as a contingent public sector liability by the Kenyan Treasury (due to the fact that early termination of the PPP contract with Moja Expressway Company Limited would require that the Government of Kenya make termination payments to Moja Expressway Company Limited).
Staff comments
1. This project is also known as the JKIA-Westlands Expressway (30KM) PPP Project, the Nairobi Expressway Project, the Nairobi Expressway Road Project, the Nairobi JKIA–James Gichuru Expressway Road Project, and the BOT Nairobi JKIA-James Gichuru Expressway Project. 2. The Chinese project title is 中国路桥肯尼亚高速公路项目 or 内罗毕机场（乔莫·肯雅塔国际机场）高架桥项目 or 肯尼亚内罗毕机场高架桥项目 or 内罗毕高速公路项目 or 中国路桥肯尼亚高架桥项目 or 肯尼亚内罗毕快速路项目 or 内罗毕机场收费快速路 or 肯尼亚内罗毕快速路项目 or 内罗毕机场收费快速路 or 肯尼亚内罗毕快速路项目 or 肯尼亚内罗毕快速路投资项目 or 内罗毕机场收费快速路项目 or 肯尼亚内罗毕快速路项目. 3. Some sources refer to the length of expressway as 18.586 km. However, this appears to be a refer to the section of the expressway that is on the ground (rather than the ‘elevated’ section that runs along a set of viaducts). 4. Sources refer to the total cost of the project as $667.8 million, $660.8 million, or $509.2 million. 5. The project financiers are identified via https://www.cdb.com.cn/xwzx/mtjj/202409/t20240904_11896.html and https://news.goalfore.cn/topstories/detail/66164.html 6. According to a January 2020 Fiscal Transparency Evaluation, ‘[t]here is no transparent disclosure of the full assets and liabilities relating to ongoing and planned PPPs despite this financing modality being increasingly preferred by the [Kenyan] government. The total value of PPP projects in the pipeline is estimated at 13 per cent of GDP’. 7. The October 18, 2023 loan (facility agreement) is referenced here: https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/202310/t20231020_11164541.html 8. Evidence that the loan is backed by a Sinosure credit insurance policy can be found at https://www.sohu.com/a/728230229_121123850 and https://www.dropbox.com/scl/fi/zwqp7hloxer7lktl3stn8/_-_-_-_.pdf?rlkey=1qfppk3alshr25a8nb68h1hxe&dl=0 and https://news.goalfore.cn/topstories/detail/66164.html 9. Evidence that the loan is backed by a sovereign guarantee can be found here: https://www.dropbox.com/scl/fi/3vw1z2qbp9scnsbbvsojo/c8838056fc7ceb0357637b39d2470aa0.pdf?rlkey=qr0x2zw1de3d95z5inlmghtro&dl=0. Note, in particular, the passages that read as follows: 'The project was financed by CRBC through a credit facility from Government of China under Guarantee of Kenya Government' and '[I]n the case of Kenya, the project was financed by the private party through a credit facility from Chinese financial Institution under the sovereign guarantee from the Government of Kenya.' 10. Some sources suggest that the loan agreement was signed on September 8, 2019 rather than October 18, 2023. This issue warrants further investigation. 11. Stanbic partnered with Moja Expressway to facilitate toll collections on the Nairobi Expressway. Stanbic is also acting as the sole payment agent in Kenya, acting on behalf of the project's lenders and escrow agents. 12. Moja Expressway Company Limited is a limited company registered in the Republic of Kenya under company number PVT-XYUJQ62. 13. The estimated interest rate and grace period that apply to the loan are drawn from the following source: https://www.dropbox.com/s/mcry3ltm3palbf8/420352565-20190304-Nairobi-JKIA-to-JG-Rd-Expressway-Project-final.pdf?e=1&dl=0 14. CDB's contribution to the loan is unknown for the time being. For the time being, AidData has assumed CDB and China Eximbank contributed equally ($247,000,000 each).