Roads PPPs taking shape across East Africa | KPMG | KE

Roads PPPs taking shape across East Africa

Roads PPPs taking shape across East Africa

On 14 March 2017, International Project Finance Association in conjunction with KPMG and Gowling WLG hosted a breakfast summit to discuss the role of public private partnerships (PPPs) in infrastructure financing for roads projects across the East Africa region.

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Roads PPPs taking shape across East Africa

The event brought together project developers, local and international construction companies, financiers, commercial banks, development finance institutions, consultants and government representatives to examine the PPP roads programs in Kenya and Uganda as both countries shift to the procurement phase on their flagship projects.

Speaking at the event were Engineer Stanley Kamau, Director of the National Treasury’s PPP Unit, Engineer George Kiiru, Head of PPP Unit at Kenya National Highways Authority (KENHA) and Patrick Muleme, Design Head at Uganda National Roads Authority (UNRA).

During the event, representatives from both KENHA and UNRA provided updates to the timelines and project milestones of their flagship road PPP projects.

  • Nairobi-Nakuru-Mau Summit PPP in Kenya is in the process of naming a shortlist of developers to proceed to the bidding stage from a long list of 10 consortia that expressed interest in the project. The shortlist is expected to be confirmed in early to mid-April. Immediately following this, KENHA expects to release the requalification documents for its second PPP roads project, being Thika Road operations and maintenance contract.
  • In Uganda, the eagerly awaited procurement for Kampala-Jinja Expressway PPP will begin in April 2017 with the release of Request for Prequalification documents to the market. Many of the bidding consortia that expressed interest for Nairobi-Nakuru-Mau Summit PPP are also likely to pursue this Ugandan opportunity.

“The roads programmes come at an exciting time for the region, building on several ‘first of kind’ PPPs in East Africa that have recently reached implementation milestones over the last two years” says Tom Gray, Senior Associate at Gowling WLG who advised on the Rwanda Logistics Programme, the first publicly procured PPP in East Africa.

During the panel discussion and Q&A that was moderated by James Woodward, KPMG’s Head of Infrastructure Hub for Africa, the issues of alternative routes and tolling were explored. Eng. Kamau confirmed that the tolling policy has now been approved by the Cabinet with only a few additional steps required to prepare for implementation. “One of the remaining steps is to extend the consultation to the public and convey to them the benefits of these projects” says Eng. Kamau.

Extensive feasibility studies have been undertaken by government transaction advisors who have concluded that tolling is a critical success factor for the roads PPP program in Kenya. “Without tolling, international investors do not achieve sufficient comfort to encourage them to competitively bid for these projects. Knowing that there is ring-fenced tolling revenue provides them with that comfort” says Mr Woodward.

Beyond tolling, the issue of access to alternative routes was covered. “On some projects, such as Nyali Bridge, this might be possible. Whereas on others, it is difficult to implement. For other PPP projects such as Thika Road, the options are to either do nothing or push forward. We are a nation that pushes forward” says Eng. Kamau.

Following the presentations from KENHA and UNRA, it was clear that both roads programmes are at similar stages of development and there is an opportunity for collaboration to ensure consistency in the approach to implementing these projects. Collaboration was welcomed by both KENHA and UNRA. The Acting PPP Unit Director for Uganda has recently joined the IPFA East Africa branch council alongside Eng Kamau, providing an initial platform from which to encourage this dialogue for the good of East Africa.

 

James Woodward
KPMG Head of infrastructure Hub, Africa
jameswoodward1@kpmg.co.ke
Mobile: +254 709576498

© 2017 KPMG Advisory Services Limited, a Kenyan Limited Liability Company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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