Chinese bank provides $501 million loan for Nairobi JKIA–James Gichuru Road Expressway Project

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 75:25. On September 8, 2019, Moja Expressway Company Limited — a special purpose vehicle and wholly owned subsidiary of CRBC — signed a loan agreement worth approximately $501 million with an unspecified Chinese bank. The loan carries the following borrowing terms: a 20-year maturity, a 3-year grace period, and a 7% 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, will run from JKIA to James Gichuru road (Westlands Redhill Road Link). It will connect Mlolongo town in Machakos County with James Gichuru Road along the median strip of the A8 National Road. The 4-lane dual carriageway will have 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 will be built to a Class A standard with a design speed of 80 km/h. 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 ultimately opened to traffic on May 14, 2022. 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).

Additional details

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. 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). Also, some sources refer to the total cost of the project as $667.8 million, $660.8 million, or $509.2 million. 4. The identity of the financier is unknown. However, nearly all of the road projects that CRBC has implemented on a PPP basis have been financed by China Eximbank, China Development Bank, or another Chinese state-owned bank. For the time being, AidData assumes that a Chinese state-owned bank issued the $501 million loan to Moja Expressway Company Limited. However, this issues warrants further investigation. 5. 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’.

Number of official sources

21

Number of total sources

64