US firm pulls out of the Nairobi–Mombasa carriageway over-inflated costs

The funding for the project had been hinged on the understanding that the US firm would undertake the construction of the 750 kilometre road from Nairobi to Mombasa on the Built, Operate and Transfer (BOT) basis

By The Weekly Vision Special Correspondent

Plans by President Uhuru Kenyatta’s Jubilee administration to construct a dual carriageway linking Nairobi to Mombasa at Kshs 300b hit a snag after a US contractor pulled out. The deal meant to end the chronic traffic jams on the busy highway was signed during the president’s visit to the US last year where he met the then President Donald Trump.

The funding for the project had been hinged on the understanding that the US firm would undertake the construction of the 750 kilometre road from Nairobi to Mombasa on the Built, Operate and Transfer (BOT) basis. This has left little option for the president whose second and last term ends August 2022 but to seek external debt.

Former UNCTAD Secretary-General Mukhisa Kituyi is warning that any further external loans secured by Kenya would push the country to the precipice of economic collapse. Mr Kituyi quit the UN job to run for president in Kenya’s 2022 elections, he has appealed to Uhuru to drop any major plans on “infrastructure” as the country faces a huge external debt burden now standing at Kshs 9 trillion.

The Nairobi-Mombasa expressway project is currently listed under the planned projects’ on the Kenya National Highways Authority (KeNHA) website, with no specific timelines regarding commencement or completion. The initial cost by Bechtel, a US-based private construction conglomerate is estimated at Ksh185.9 billion, however, the Kenyan government placed the cost at Ksh309.9 billion which was Ksh124 billion more, leading to a pullout from the US partners, citing inflation of costs as a key reason

According to the sources at Kenya’s treasury, the country has already written to multi-lateral lenders such as the World Bank and IMF, both are said to have suggested expansion of the tax bracket including the hiking of fuel prices now the highest in East Africa.

Speaking to The Weekly Vision Online on the recent fuel price increases on the 4th of this year, Kituyi warned that Kenya’s GDP- External Debt ratio had crossed the acceptable international threshold. Recent punitive price increases on fuel in Nairobi and petroleum products are part of the “structural adjustment plan” floated by multi-lateral lenders.

The Nairobi-Mombasa expressway project is currently listed under the ‘planned projects’ on the Kenya National Highways Authority (KeNHA) website, with no specific timelines regarding commencement or completion. The initial cost by Bechtel, a US-based private construction conglomerate is estimated at Ksh185.9 billion. The US firm won the contract in a government-to-government deal that formed part of President Kenyatta’s discussions with US President Donald Trump at the time.

The proposed 4-lane-dual carriageway was meant to link Nairobi to Mombasa and cut road travel time to an estimated 4 hours from the current 8 hours. Construction of expressway was to begin at the Jomo Kenyatta International Airport (JKIA) along the existing Nairobi-Mombasa highway and snake through seven Counties to end at the Changamwe roundabout in Mombasa

However, the Kenyan government placed the cost at Ksh309.9 billion which was Ksh124 billion more, leading to a pullout from the US partners, citing inflation of costs as a key reason. The US Embassy in Nairobi said that the contracted company is subject to the country’s Foreign Corrupt Practices Act which must ensure American companies do not engage in corrupt dealings.

“We are still working on the financing Kenya has a challenge of debt and we are wary of burdening Kenyans,” US Ambassador to Kenya said. He further added that the US is wary of committing to a project whose cost would turn out to be three to four times higher than the actual cost, reiterating that the US was keen to ensure an honest return on investment to Kenyans. The proposed 4-lane-dual carriageway was meant to link Nairobi to Mombasa and cut road travel time to an estimated 4 hours from the current 8 hours. Construction of expressway was to begin at the Jomo Kenyatta International Airport (JKIA) along the existing Nairobi-Mombasa highway and snake through seven Counties to end at the Changamwe roundabout in Mombasa.

admin
Author: admin

There’s no story that cannot be told. We cover the stories that others don’t want to be told, we bring you all the news you need. If you have tips, exposes or any story you need to be told bluntly and all queries write to us [email protected] also find us on twitter.

admin
Author: admin

Leave a Reply

Your email address will not be published.

Open chat
1
Hello, how can we help you?