Republic of Kenya Ministry of Roads Policy Statement

Presentation to Institutional Investor, Africa Investment Conference

Ministry of Roads – Vision and Mission
Ministry of Roads Purpose
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 and Mission

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

Ministry of Roads Profile

Ministry of Roads

One of the key Infrastructure Government Ministries in Kenya 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 Plans

Increase connectivity by roads to production centers 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

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Means of Delivery of Strategy

Clear assignment of portions of road network to semi autonomous implementing authorities Instituting efficient road fund management Use of Private Sector partnership on the most commercially viable sections of the primary road network

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Toll Road Concessioning in Kenya
Presentation to Institutional Investor, Africa Investment Conference

Sponsor Profile

Kenya National Highways Authority

Established under the Roads Act (2007) as an Autonomous Road Authority. One of the new Road Authorities responsible for the 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 Profile Nairobi Urban Toll Road Concession

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 Benefits

 Reduction of Transportation cost on the Northern Corridor
route by 25%.

 Reduction in travel time between the port of
the hinterland by two (2) hours

Mombasa and

Social Benefits

 Reduction of traffic congestion and pollution in and around
the Nairobi CBD.

 Expansion of Spatial Development
greater Nairobi Metropolitan area.

opportunities for the

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 Nairobi City population Population growth rate Daily commuters numbers Major towns comprising Nairobi Metropolitan area Vehicle fleet growth rate 150 million 3.5 million: .5% p.a. 1.5 million: 7 (seven) 3% p.a.

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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

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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)

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

15.08 20.94 150.33 257.21 125.24 59.09 627.89

Southern Bypass Development Undertaken separately by GoK at a cost of USU 200 mill.

Tolling Regime and long-term projections
Traffic Class Type Base Toll Estimated Revenue Charges contribution (US$/km)2 (US$ millions) 0.05 1,970

Class I

Class II Class III

Light Vehicles and Passenger Car less than 1.5 tones are weight Medium heavy vehicles and light trucks 8-14 passengers Large heavy vehicles and buses with 3 or 4 axles and PSVs with over 15 passengers

0.13 0.20

1,413 2,377

Class IV

Extra Large Heavy Vehicles 0.30 and trucks more than 5 axles Estimate (US$ million)



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 Exemption during development Phases I and II for the Nairobi Southern Bypass (Section 7)3 Machakos Turnoff – Nairobi Airport (Section 2)


Financing Upgrading Provision

of Land for Developments, ROW and Toll Plazas of Services and Utilities



Construction of bypass to commence last quarter of 2011

Possible CAPEX Funding Sources

Source of Funding

% of Total

Value (US$ Millions 80.4 90 380 77.5 627.9

Equity Mezzanine Funding Senior Debt Revenue during Construction Total (US $ millions)

13% 14% 61% 12% 100%

Typical/Expected Returns

Debt Service Cover Ratio

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Senior Debt Service Cover Ratio = 2.82 Debt/Equity Ratio = 65 %

Financial Return

 Internal

Rate of Return = 18 – 23% fees paid only when IRR > 23 %

 Concession


SDCR = 4.56 with Construction period Traffic Revenue Guarantee


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