A report by the Chinese firm undertaking the construction of the Nairobi Expressway shows a Ksh7.6 billion cost increase from the Ksh65 billion figure initially announced by the Ministry of Transport.
China Communications Construction Company (CCCC), the parent firm of China Road and Bridge Corporation (CRBC), which is funding and constructing the expressway, revealed in regulatory filings that the project’s contract value is Ksh72.8 billion ($668 million).
The figure is higher by Ksh7.6 billion as compared to the initial budget estimate provided by the Kenya National Highways Authority (KeNHA) of Sh65.2 billion ($599 million).
CCCC made the contract disclosure as it is required of them to do so as they are listed on both the Shanghai and Hong Kong Stock Exchanges.
The firm's regulatory filings show that it has so far invested Ksh20.3 billion (1.19 billion RMB) at current exchange rates on building the expressway.
Some contracts have escalation cost clauses to meet factors such as design fluctuations and sharp increases in building materials, although this has not yet been determined to be the reason for the increase.
The increased construction costs will have an effect on Kenyan motorists as there could be higher toll fees or a longer period for collection of toll fees as the Chinese firm recoups its investment before it hands the road over to the Kenyan government.
CRBC will be granted a concession to operate the road and recover funds by charging motorists toll fees for 27 years before handing over it to the State.
Motorists are expected to pay between Ksh100 and Ksh1,550 in toll charges, depending on the size of the car and the distance covered.
The toll charges will be dollar-based to cushion the Chinese operator from exchange rate losses.
The Chinese firm has recently kicked off recruitment of accountants and toll station attendants to collect toll fees as the pay-for-use project nears completion.
KeNHA earlier on stated the 27.1km highway is 57 per cent complete, with most heavy works done and expect the project to be up and running in June 2022, and not February as originally planned.
“Between now and December, we are likely to see all the heavy works involving deep excavation, diversions completed,” KeNHA Chairman Wangai Ndirangu noted earlier.
