The Nairobi Expressway, Kenya’s flagship public-private partnership (PPP) infrastructure project, reported a KSh 1.2 billion loss for the fiscal year ending June 30, 2024.
This financial outcome persists despite increased traffic volumes and a 50% hike in toll charges implemented earlier in the year.
According to data from the National Treasury, the expressway generated KSh 4.6 billion in revenue during this period, while operational expenses amounted to KSh 5.8 billion, resulting in the deficit. n0fetch1
Moja Expressway, the operator of the elevated roadway, attributed the financial shortfall to elevated interest rates and the depreciation of the Kenyan shilling against the U.S. dollar.
The project was financed with a 50% loan, and rising interest rates have increased loan repayment costs.
Additionally, fluctuations in the exchange rate have further impacted financial performance.
In response to these financial challenges, the government revised the expressway’s toll rates in January 2024.
The new rates ranged from KSh 170 to KSh 500, up from the previous range of KSh 100 to KSh 310.
For instance, the toll for a trip from Westlands to Mlolongo increased from KSh 360 to KSh 500.
Transport Cabinet Secretary Kipchumba Murkomen stated that these adjustments were necessary due to the depreciation of the Kenyan shilling against the U.S. dollar and were in line with the PPP agreement’s provisions.
Despite these measures, the expressway’s financial performance fell short of expectations.
xperts attribute this to the depreciation of the Kenyan shilling against the U.S. dollar, which increased the cost of servicing foreign-denominated loans used to finance the project. n0fetch1
The Nairobi Expressway, launched in 2022, was constructed by the China Road and Bridge Corporation (CRBC) at a cost of KSh 88 billion.
Under the PPP arrangement, CRBC will operate the expressway for 27 years to recoup its investment before transferring ownership to the Kenyan government. n0fetch1
This financial outcome underscores the complexities and risks associated with PPP-funded infrastructure projects, particularly amid economic fluctuations and currency volatility.
