Chinese firms start work on $1.5bn Kenya highway after Vinci deal cancelled

The Nairobi Expressway undertaken by the China Road and Bridge Corporation (CRBC) on a public-private partnership (PPP) basis, in Nairobi, Kenya (Image: Reuters/Thomas Mukoya/File Photo)

Two state-backed Chinese contractors are starting work on a $1.5 billion highway expansion in Kenya, after a deal for a Vinci-led consortium to build the project was cancelled earlier this year.

The project linking the capital Nairobi to the Rift Valley city of Nakuru is split into two phases. The first involves China Road and Bridge Corporation expanding two existing stretches of a single-lane, 139-kilometre (86-mile) highway into four- and six-lane dual-carriage roads at a cost of US$863 million, according to the Kenya National Highways Authority.

The second will see Shandong Hi-Speed Road and Bridge International expand an existing single-lane, 94-kilometre stretch of highway into a six-lane carriageway at a cost of $679 million.

The projects are being developed under a public-private partnerships agreement, with deals for the two portions of the project split into 75% debt and 25% equity. Kenya’s state pension fund NSSF will contribute 45% of the equity funding in the first phase. The borrowing is expected to come from Chinese commercial lenders and state entities like Export-Import Bank of China.

Construction is due for completion in 2027, followed by a 28-year concession to collect tolls.

Announcing the cancellation of its deal with the Vinci-led consortium in April, the Kenya National Highways Authority (KeNHA) said the terms of the agreement put the risk from insufficient traffic demand onto the government. It requested a restructuring of the contract but the proposal ended in stalemate, the agency said at the time.