The Nairobi expressway made a Sh1.2 billion loss in the period between July 2023 to June 30, 2024, pointing to the struggles of what is hailed as Kenya’s first significant and visible private partnership project.
Treasury disclosures tabled in Parliament recently reveal that the project earned Sh4.6 billion at a time when operations cost the Chinese investor Sh5.8 billion.
Other PPP ventures mentioned in the report are the 35MW Sosian Menengai geothermal power plant, which posted a Sh2.3 billion profit and the roads annuity, with profits of about Sh350 million each.
The expressway is among China’s flagship projects in Kenya, East Afrca under the Belt and Road Initiative and shortens travel time from JKIA to Nairobi CBD to 20 minutes, from two hours.
China Roads and Bridges Construction will operate and maintain it for 30 years to recoup their investment.
Traffic on the highway operated by Moja Expressway – a subsidiary of CRBC, averages 11,000 vehicles daily.
The project has no financial burden on Kenyans, but yet to break even unless more motorists use it. The management said that whereas the traffic numbers have grown, they are yet to hit the target set in the project’s financing model.
Further, an increase in interest rates and currency fluctuations affecting the US dollar remains a bane. It is emerging that the investor took a facility in dollars and hence has to buy the same for repayment.
Tolls are collected in Kenya Shillings, which pundits see as steady presently – at about Sh130 to the USD. Owing to the dismal traffic, the revenue hasn’t met the target.
“It is a still big loss because collection at the site is Kenya Shilling, every shilling we collect, we convert to USD and could lose up to 38 per cent,” an official said. With the costly foreign charges, Moja Expressway argues that it has had to bear the extra expense.
“We bear the loss again and again… toll rates are a way to sustain the project and give the investor confidence,” the official explained.
It is understood that government has been slow to adjust the toll rates further.
“We need to increase but we will not…the cost will be borne by the operator,” the official added. Kenha, the state agency superintending the road and the investor, reportedly closed ranks on grounds of the tough economic conditions.
Moja, we gather the agreement provides, has the right to adjust the rates once a year. The last review was in January 2024, two years into operations.
Management says the factors informing the formula for calculating the toll rates have gone up over time.
It is a tactical balancing act of giving motorists a better incentive to push the numbers and bear the risks
