Republic of Kenya

Ministry of Roads
Policy Statement

Presentation to Institutional Investor,

Africa Investment Conference
Ministry of Roads – Vision and Mission
Ministry Purpose
of Roads
The Ministry of Roads is one of the key Infrastructure
Development Ministries in Kenya that include, inter-alia:

•Ministry of Transport
•Ministry of Energy
•Ministry of Water and Irrigation
•Ministry of Public Works
•Ministry of Information and Communication

Vision Vision
To attain and sustain world class roads infrastructure to
and
enhance socio-economic development.
Mission
Mission
To facilitate provision, maintenance and management
of quality roads infrastructure in support of Kenya’s
Vision 2030 strategy.
Ministry of Roads Profile

 One of the key Infrastructure Government Ministries in

Ministry Kenya
of Roads
 Responsible for Policy formulation in Road Transport
 Responsible for three (3) semi-autonomous Road
Authorities and a Road Fund Board (Kenya Roads
Board)
 Responsible for 170,000 km (106,000 miles) of
Classified and Unclassified Roads in Kenya
Strategic Plans

Strategic  Increase connectivity by roads to production centers

Plans through construction of 300 km of new roads per year
 Eliminate road maintenance backlog and address
maintenance needs in a timely manner
 Enhance capacity in the construction industry
 Carry out research on alternative construction
methodologies

Means of  Clear assignment of portions of road network to semi

Delivery of autonomous implementing authorities
Strategy  Instituting efficient road fund management
 Use of Private Sector partnership on the most
commercially viable sections of the primary road network
Toll Road
Concessioning in Kenya

Presentation to Institutional Investor,

Africa Investment Conference
 Sponsor Profile

 Established under the Roads Act (2007) as an

Kenya
Autonomous Road Authority.
National
Highways  One of the new Road Authorities responsible for the
Authority National Trunk Roads (13,000 km).
 Responsible for viable system of roads carrying the
94%) of transit/freight traffic.
 Mandated by Law to appoint private entities to develop,
operate and maintain trunk roads
Project Profile
Project Nairobi Urban Toll Road Concession
Profile  Construction of Overpass section through Nairobi Central
Business District.
 Extension of Dual Carriageway to ICT City at Konza
 Construction of Four (4) Interchanges
 Tolling and maintenance operations for 30 years.

Economic  Reduction of Transportation cost on the Northern Corridor

Benefits route by 25%.
 Reduction in travel time between the port of Mombasa and
the hinterland by two (2) hours

Social  Reduction of traffic congestion and pollution in and around

Benefits the Nairobi CBD.
 Expansion of Spatial Development opportunities for the
greater Nairobi Metropolitan area.
Project Feasibility by BKS
Global / Africon (SA)

 The entire Northern Corridor Route (950 km) is viable for

conventional concessioning.

 Northern Corridor Concession 2 (Nairobi Urban Toll Road)

that carries average of 18,000 vehicles per day is one of the
most viable sections for concessioning.

 Roads with more than 500 vehicles per day are attractive for
Shadow Tolling.
Northern Corridor - Schematic Layout of Toll Concessions
Planned Road Concessions

Concession 1 (469 km)

Mombasa – Machakos Turnoff
5,000 vehicles per day

Concession 2 (106 km)

Machakos Turnoff – Nairobi CBD – Rironi
and Nairobi Southern Bypass
(18,000 vehicles per day)

Concession 3 (407 km)

Nairobi – Nakuru – Eldoret – Malaba
(6,500 vehicles per day)
Nairobi City traffic congestion
 25 km journey
(Airport to CBD)
takes over one
hour

 Traversing
Nairobi CBD
takes over two
hours

 The busiest
junctions each
carry some
30,000 vehicles
per day

 Congestion
problem is
getting worse
Concession 2: Nairobi Urban Toll Road
Project Drivers
 Toll Road traverses Nairobi – Kenya’s economic city and regional
business hub.

Regional population 150 million

Nairobi City population 3.5 million:

Population growth rate
.5% p.a.
Daily commuters numbers 1.5 million:

Major towns comprising Nairobi Metropolitan area 7 (seven)

Vehicle fleet growth rate 3% p.a.

 Nairobi City suffers chronic traffic congestion and air pollution

 The Toll Road is the backbone of the Trunk Road System that links city
bypasses and arterial roads to surrounding towns.
Scope of Works – Phase I

 Construction of 4-lane overpass (viaduct ) and flyover (5.9 km).

 Upgrading 2 km section to 8-lane dual carriageway.
 Construction of 2-lane frontage roads on both sides of the viaduct (6km)
 Construction of facilities for non-motorized traffic and street lighting
 Construction of two mainline toll plazas and ramp plazas
 Scope of Works (Phase II)

 Extension of Dual Carriageway to Konza ICT City (7 km)

 Upgrading of Interchanges at Airport North Road

 Strengthening and capacity upgrades on existing 4-lane road section

(27.2 km)

 Construction of remaining two Mainline and Ramp Plazas.

Estimated Private Capital Costs - US$ million

Section 1 Konza –Machakos Turnoff - Athi River (40km) 15.08

Section 2 Athi River – JKIA Turnoff (12 km) 20.94
Section 3 JKIA - Lusaka Road I/C. 150.33
Section 4 Lusaka Road – CBD – Museum Hill I/C (5.9 km) 257.21
Section 5 Westlands – Kikuyu I/C 125.24
Section 6 Kikuyu - Rironi 59.09
Section 7 Nairobi Southern Bypass1 -
Total (US $) million 627.89

Southern Bypass Development Undertaken separately by GoK at a cost of USU

200 mill.
 Tolling Regime and long-term projections
Traffic Type Base Toll Estimated Revenue
Class Charges contribution
(US$/km)2 (US$ millions)

Class I Light Vehicles and 0.05 1,970

Passenger Car less than 1.5
tones are weight
Class II Medium heavy vehicles and 0.13 1,413
light trucks 8-14 passengers
Class III Large heavy vehicles and 0.20 2,377
buses with 3 or 4 axles and
PSVs with over 15
passengers
Class IV Extra Large Heavy Vehicles 0.30 1,026
and trucks more than 5
axles
Estimate (US$ million) 6,786

Toll rates to be adjusted in accordance with prevailing CPI Rates

Possible Concession Structure
 Government Contribution

Government of Kenya is prepared/has made arrangements to provide

the following enhancements to the project:

 Provision of Investment Guarantees

Tax Exemption during development Phases I and II
Financing for the Nairobi Southern Bypass (Section 7)3
Upgrading Machakos Turnoff – Nairobi Airport (Section 2)
Provision of Land for Developments, ROW and Toll Plazas
Relocation of Services and Utilities

3
Construction of bypass to commence last quarter of 2011
Possible CAPEX Funding Sources

Source of Funding % of Total Value (US$

Millions

Equity 13% 80.4

Mezzanine Funding 14% 90

Senior Debt 61% 380

Revenue during Construction 12% 77.5

Total (US $ millions) 100% 627.9

 Typical/Expected Returns

Debt Service  Senior Debt Service Cover Ratio = 2.82

 Cover Ratio  Debt/Equity Ratio = 65 %

Financial  Internal Rate of Return = 18 – 23%

 Return  Concession fees paid only when IRR > 23 %

SDCR = 4.56 with Construction period Traffic Revenue Guarantee

4
THANK YOU