toll road concession
TRANSCRIPT
Republic of KenyaMinistry of RoadsPolicy 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
VisionTo attain and sustain world class roads infrastructure to enhance socio-economic development.
MissionTo 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
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
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
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 Mombasa and the hinterland by two (2) hours
Social Benefits
Reduction of traffic congestion and pollution in and around the Nairobi CBD.
Expansion of Spatial Development opportunities for the greater Nairobi Metropolitan area.
Project Profile
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
Concession 1 (469 km)Mombasa – Machakos Turnoff 5,000 vehicles per day
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 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)
Concession 3 (407 km)Nairobi – Nakuru – Eldoret – Malaba(6,500 vehicles per day)
Planned Road Concessions
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.
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.
Regional population 150 million
Nairobi City population 3.5 million:
Population growth rate 3.5% p.a.
Daily commuters numbers 1.5 million:
Major towns comprising Nairobi Metropolitan area 7 (seven)
Vehicle fleet growth rate 3% p.a.
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 I
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.
Scope of Works (Phase II)
Section 1 Konza –Machakos Turnoff - Athi River (40km) 15.08
Section 2 Athi River – JKIA Turnoff (12 km) 20.94
Section 3 JKIA - Lusaka Road I/C. 150.33
Section 4 Lusaka Road – CBD – Museum Hill I/C (5.9 km) 257.21
Section 5 Westlands – Kikuyu I/C 125.24
Section 6 Kikuyu - Rironi 59.09
Section 7 Nairobi Southern Bypass1 -
Total (US $) million 627.89
Estimated Private Capital Costs - US$ million
Southern Bypass Development Undertaken separately by GoK at a cost of USU 200 mill.
Traffic Class
Type
Base Toll Charges
(US$/km)2
Estimated Revenue
contribution (US$ millions)
Class ILight Vehicles and Passenger Car less than 1.5 tones are weight
0.05 1,970
Class IIMedium heavy vehicles and light trucks 8-14 passengers
0.13 1,413
Class III
Large heavy vehicles and buses with 3 or 4 axles and PSVs with over 15 passengers
0.20 2,377
Class IVExtra Large Heavy Vehicles and trucks more than 5 axles
0.30 1,026
Estimate (US$ million) 6,786
Tolling Regime and long-term projections
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
Tax Exemption during development Phases I and II
Financing for the Nairobi Southern Bypass (Section 7)3
Upgrading Machakos Turnoff – Nairobi Airport (Section 2)
Provision of Land for Developments, ROW and Toll Plazas
Relocation of Services and Utilities
3Construction of bypass to commence last quarter of 2011
Possible CAPEX Funding Sources
Source of Funding % of TotalValue (US$
Millions
Equity 13% 80.4
Mezzanine Funding 14% 90
Senior Debt 61% 380
Revenue during Construction 12% 77.5
Total (US $ millions) 100% 627.9
Debt Service Cover Ratio
Senior Debt Service Cover Ratio = 2.82
Debt/Equity Ratio = 65 %
Financial Return
Internal Rate of Return = 18 – 23%
Concession fees paid only when IRR > 23 %
Typical/Expected Returns
4SDCR = 4.56 with Construction period Traffic Revenue Guarantee
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