Picture: REUTERS/NOOR KHAMIS
Picture: REUTERS/NOOR KHAMIS

Nairobi — Kenya’s second-biggest infrastructure project since independence five decades ago, a $3.5bn inter-city expressway, will be delayed because legislators are worried the country is taking on too much debt, the company building it has said.

While Kenya is ramping up construction of much-needed infrastructure to underpin economic growth, the cost of the mega projects, mostly financed by Chinese loans, has stirred concern that the debt is unsustainable for the $71bn economy.

Kenya’s debt could rise to 58% of gross domestic product by the end of June, from 40.6% in the 2011-12 fiscal year, according to World Bank estimates.

Construction of the 473km, four-lane highway between the capital, Nairobi, and the second-biggest city, Mombasa, will be undertaken by San Francisco-based Bechtel Group, which has arranged commercial loans for Kenya to undertake the project.

The country will not seek concessional financing or a public-private partnership, according to the company.

The Kenya National Highways Authority said it was not aware of any delay.

Its public relations officer, Charles Njogu, said: "The agreement has, however, to be scrutinised by lawmakers because of its size."

Transport and Infrastructure Secretary James Macharia did not pick up calls to his cellphone or respond to a text message seeking comment.

Big concern

Andrew Patterson, Bechtel’s regional president for Africa, said the financing arrangements for the toll road were now expected to be in place by end-June, the initial sod-turning target, and construction would now begin in the second half of the year.

"This is looking to be slipping," he said in e-mailed responses to questions on Monday. "The debt level is a big concern and we are working to find the right balance with Treasury in regards to the financing."

Kenya’s biggest infrastructure project since independence from Britain in 1963 is an $8.7bn standard-gauge railway from Mombasa to the Ugandan border that is being built under China’s flagship Belt and Road programme. The first phase of the line, which replaces a parallel century-old link built during the colonial era, is already operational.

Bechtel said in December it was supporting the Kenyan government in negotiations with the US Export-Import Bank, the Overseas Private Investment Corporation and UK Export Finance to finance the dual carriageway.

The lead arranger would be appointed by June, allowing construction to begin, Patterson said.

Bechtel plans to deliver 50km of road every six months, completing the project in early 2024.

The highway is expected to cut travel time between the two cities to four hours from 10.

The construction will be done under an engineering, procurement and construction contract, while toll fees will be levied through a public-private-partnership agreement.

Bloomberg

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