US firm declines to take part in Nairobi-Mombasa Expressway over inflated cost

The Kenyan government has been forced to replace a US contractor; Bechtel Engineering, with a Korean firm after a fallout in a financing model for the proposed Nairobi-Mombasa expressway.

The state had proposed a toll fee business model where the American firm would source funding and then recoup its cost through toll fees, but the company declined the offer. insisting on a contract model where the government would pay for the construction of the Ksh318.25 billion Mombasa-Nairobi expressway.

The firm argued that the public-private partnership model that would see it recoup the cost of contracting the 473-kilometre highway through toll fees would inflate the cost of the project to ksh1.6 trillion since it would involve borrowing and interest payments which it did not want to get involved in.

“Our approach will always set out to minimize building costs and pursue the fiscally responsible option,” the firm’s spokesperson Aileen Easton was quoted by Engineering News-Record.

“We are committed to providing the best possible value of money for the Kenyan people.”

Following the fallout with the American firm, Kenya agreed with Korean Overseas Infrastructure and Urban Development Corporation Africa (KID) which agreed to undertake the project and has since submitted a feasibility study of the project to the government officials.

The quick switch of contractors underscores Kenya’s financial situation given its high public debt which has since pushed it to adopt public-private partnerships to reduce pressure on the country’s balance sheet.