President Uhuru Kenyatta with International Finance Corporation (IFC) Managing Director Makhtar Diop at State House, Nairobi. PHOTO | PSCU
The International Finance Corporation (IFC) is the latest high-profile investor to join the
scramble to fund the Sh180 billion Nairobi-Mau Summit Highway, giving the French contractor a major boost in raising the war chest to build the road.The global financier, part of the World Bank Group, has published the project’s environmental and social impact assessment (ESIA) documents for public review before it commits to funding the road.
“The purpose of this early disclosure is to enhance the transparency of IFC’s activities with reference to those projects or investments with potential significant adverse environmental and social risks and/or impacts,” the institution said.
“The disclosure of this ESIA should not be construed as presuming the outcome of IFC’s review of the potential investment or the decision of its board of directors.”
IFC has not indicated the potential nature of its investment in the project, which could be debt or equity. The financier, however, mostly provides loans and in a few instances takes ownership in private companies.
The intention to invest in the road project comes in the wake of IFC managing director Makhtar Diop’s recent visit to Kenya during which he met President Uhuru Kenyatta.
The two reportedly discussed the country’s economic reform and growth agenda and how IFC could best support its vibrant private sector.
The other major institutional investor that has announced its participation in the funding of the road project is the African Development Bank (AfDB).
“We are looking to be part of the financing group for the Nairobi-Nakuru road project,” said Solomon Quaynor, AfDB’s vice-president for the private sector, infrastructure and industrialisation complex, in an interview.
“We are looking to (fund the project) as a financing syndicate. These projects are too large for any one of us. Even for prudent financial means, we don’t do 100 percent of financing a project,” he said.
The financiers are eying the billions of shillings to be generated from the highway through tolling.
It is set to be the second major road after the Nairobi Express Way where motorists will be charged for use. The project has faced challenges, including the supervision contract, whose cancellation was contested at a tribunal.
The highway is one of the first road projects to be developed under a public-private partnership (PPP) framework in Kenya.
The project entails the expansion and upgrade of the highway system that has been tendered pursuant to a 30-year design, build, finance, operate, maintain and transfer contract with the Kenya National Highways Authority.
It involves the dualling, into a four-lane dual carriageway of a portion of the highway between Rironi and Mau Summit, including operation and maintenance.
It will also feature the strengthening of the section between Rironi and Naivasha, including operation and maintenance.
The project company is Rift Valley Highway Limited (RVHL), which is a consortium led by Vinci Highways, a leading concessions firm in the world, and Meridiam, a global investor and asset manager, both headquartered in Paris, France.
The project operator will collect its capital outlay and returns from toll fees and hand back the 233-kilometre road to the government at the end of the 30 years.
The construction of the toll highway from Nairobi to Mau Summit was expected to begin in September last year but has been delayed due to wrangles over the supervision contract and a further review of the project’s environmental and social impact assessments.
IFC says the ESIA documents it has published for public review have been prepared by RVHL. Completion of the road expansion and upgrade will ease traffic congestion on the important transport corridor.
vjuma@ke.nationmedia.com
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