Expressway to cost Sh7bn more, Chinese firm says

The Nairobi Expressway will cost Sh7.6 billion more than initially indicated by Transport ministry officials, latest disclosures from the Chinese firm undertaking the project show.

China Communications Construction Company (CCCC), the parent firm of China Road and Bridge Corporation (CRBC), which is funding and constructing the expressway, revealed in regulatory filings that the project’s contract value is $668 million (Sh72.8 billion).

The figure is higher than the $599 million (Sh65.2 billion) initial budget estimate provided by the Kenya National Highways Authority (KeNHA).

“The value of contract of the BOT (build operate transfer) project of Kenya Nairobi Expressway Investment in the form of infrastructure and other investment project amounted to RMB 4,602 million equivalent to approximately $668 million,” says the publicly listed company in its latest annual report.

CCCC is listed on both the Shanghai and Hong Kong Stock Exchanges. Listed firms are required to make all contractual disclosures through regulatory filings to their shareholders.

Some contracts usually have escalation cost clauses to cater for factors such as design variations and steep rises in construction materials. The Sunday Nation could not establish if the rise in the cost was in any way linked to this.

Invested

CCCC however said in the regulatory filings that it has so far invested 1.19 billion RMB (Sh20.3 billion) at current exchange rates on building the Expressway.

Increased upfront construction costs could mean higher toll fees or a longer period for collection of toll fees from Kenyan motorists before the Chinese firm recoups its investment and hands the road over to the Kenyan government.

Contacted on the possible explanation for the higher costs of building the road, KeNHA referred the Sunday Nation to the Chinese firm.

“I suggest you get a clarification from them,” KeNHA communications officer Charles Njogu wrote in text message.

CCCC had not responded to our queries on the variance by the time of going to press.

CRBC will be granted a concession to operate the road and recover funds by charging motorists toll fees for 27 years before ceding it to the State. Moja Expressway, a subsidiary of CRBC, will operate the road.

Kenyans are expected to pay between Sh100 and Sh1, 550 in toll charges, depending on the size of the vehicle and distance covered. The toll charges will be dollar-based to cushion the Chinese operator from exchange rate losses.

CRBC recently kicked off recruitment of accountants and toll station attendants to collect toll fees as the pay-for-use project nears completion.

Operational

Late last month, KeNHA said the 27.1km highway is 57 per cent complete, with most heavy works done. Officials expect the project to be operational in June 2022, and not February as initially planned.

“Between now and December, we are likely to see all the heavy works involving deep excavation, diversions completed,” KeNHA chairman Wangai Ndirangu said last month.

“For the period between January 2022 and June 2022, we will proceed to install the infrastructure that will allow us to operate the road furniture, markings and the tolling booths.”