Kenya’s €1.3 Billion Nairobi-Nakuru Dual-Carriageway Deal is expected to be terminated from a consortium led by France’ Vinci SA. The project is expected to go to a Chinese contractor instead, government officials and source said.

The deal entails turning 140 km[87miles] of a single lane road into a multilane highway. This highway will join the capital Nairobi the Rift Valley city of Nakuru. Also, the deal was signed in Paris in 2020 during a visit by then -president Uhuru Kenyatta.

Nairobi-Nakuru Dual-Carriageway Factsheet
Cost: €1.3 billion (approximately Ksh 190 billion).

Scope: Expansion of a 140-kilometer single-lane road into a multi-lane highway.

Location: Linking Nairobi, the capital city, to Nakuru, a significant city in the Rift Valley.

Contractor (Initial): A consortium led by Vinci Highways, which included Vinci Concessions and French private equity firm Meridiam SAS.

Agreement signing: The deal was signed in Paris in 2020 during a state visit by the then-President Uhuru Kenyatta.

Public-Private Partnership (PPP): The project was structured as a PPP, with the consortium responsible for design, funding, and construction, and expected to recover their investment through toll collections over a concession period of 26 years (as per earlier reports on a similar project).

Reasons for termination:

Unfavorable contract terms: The Kenya National Highways Authority (KeNHA) sought a restructuring of the contract terms. They deemed the contract unfavorable to the government.
Financial risk: KeNHA stated that the original agreement placed the financial risk of low traffic volumes squarely on the Kenyan government.
Unbankablre structuring proposal: The proposed restructuring of the contract was considered “unbankable,” leading to a stalemate between KeNHA and the French-led consortium.
Compensation to French consortium: Kenya is expected to compensate the French firms for the termination of the contract.
Reason for Terminating the Contract
Kenya’s decision to terminate the contract comes after government authorities had sought to review the terms of the agreement, which the National Highways Authorities [KeNHA] said put the risks from insufficient traffic demand onto the government.

KeNHA requested a restricting of the contract … but the proposal was considered unbankable thus creating a stalemate,’’ the agency to the Reuters.

This led to KeNHA issuing a notice of termination to finalise the public – private partnership contract, it said.Highway construction for the project had not yet begun.

French private equity group Meridiam SAS and Vinci Concessions- also a part of the French infrastructure group – are members of the consortium that is led by Vinci Highways. Vinci refused to comment on the contract ‘s termination. Meridiam refused to immediately respond to a request for comment.Meanwhile, two sources with direct knowledge of the government’s plan said the contract would be going to a Chinese organisation, which has yet not been disclosed.

The sources asked not to be named as they were not authorised to speak to the media.Kenya’s Finance Minister John Mbadi led a team of officials to Beijing this month where they met senior officials. Local media have reported that President William Ruto will be heading to China for a state visit later this month.