So the american company contracted to build the Nairobi-Mombasa expressway wants to be paid upfront by govt to build the road and doesnt want the Public Private partnership where they source for funds and build the road and later charge toll fees to recover the cost. They want Kenya to borrow over 300B and give the cash to them to build the road.
Also if americans said they were to fund the road, how come they want kenya to get loans for the project? Also why was the american company Bechtel single sourced by US govt to build the road and yet it is kenyan tax payers to fund the project with the US contributing zero?
The US firm contracted to build the Sh300 billion Nairobi-Mombasa Expressway has rejected Kenya’s offer to have it construct the road and recover its costs from charging motorists toll fees.
The Parliamentary Budget Office (PBO) on Tuesday said American contractor Bechtel has settled on a model where the State pays it for building the road instead of recovering its money through user fees.
This will force the government to borrow the billions of shillings, jerking public debt whose rapid growth has triggered warnings and throwing the road construction into limbo.
The plan to build the Nairobi-Mombasa Expressway dates back to the July 2015, when then US President Barack Obama signed a memoramdum of understanding with the Kenyan government.
The US government nominated construction giant Bechtel Corporation to be considered for the project.
The project contract was signed in August 2017 and was single-sourced to the American firm, keeping with the tradition of state-to-state funding deals that favour companies from the financing country.
Valid question… I guess it boils down to ability to repay back. Maybe they are seeing Kenyans might fail to honor payments.
Hii kitu ni rahisi… sell infrastructure bonds to akina @Purple and tell them its their way of investing back home and at the same time help them build their retirement funds. Trust me raising 300b in 1 year is easy for them.
Then 20 years down the road you honor the bond at a less interest than commercial loans, then most important @Purple et al will use the same retirement money in our kenya economy… but Kenyan leadership underestimate the power of people in diaspora sijui ni wivu or…
It’s a fundamental problem. You see Bechtel is a US based construction firm. By US law, they are not licensed to finance. So they would have to lure an external financier unlike Chinese firms that use Exim Bank ( Chinese Governmnent ). Also there may be questions about Kenya’s risk position. Already the Chinese have the ports as collateral for SGR. And other public assets. What’s left for another financier to attach as a security deposit in case the project is not financially sound. Assets like Karura forest do not generate enough income.
Its also costly long term to have a contractor finance. Why? They add fees to their lending costs. Where as a government would control its borrowing costs, a contractor would tuck in extra charges to the loan balance and increase the payoff period at the toll payments. The consumer ( citizen) gets stiffed.
The American contractors assessed the risk portfolio of Kenya and saw how it would make the citizens suffer more and more and they decided against it. Meanwhile Chinks are happy to burden third world bonobos with expensive loans that push the cost of living up the roof. The Chinks don’t care and if you fail to pay, they would move in and seize the Port of Mombasa na mtaanza kununua kiberiti Ksh 500, mkate itakuwa Ksh 10k. Reject the Chinese imperialistic tendency before you or you children come to pay a heavy price for it. I hope @Ndindu amesikia. Chinks are not and would never be your friends. To them, a bonobo is a stupid being to exploited and enslaved to feed their ballooning population. Msiseme sikuwaambia
The western economic model is to milk african countries dry. For every dollar they spend in africa they expect 2 in return. Now they want wanjiku to borrow money and then give it to an american company under the guise of strengthening US-Kenya relations.
:D:D:D:D:D…I wonder what @johnpombe would have to say about this “project”…my personal view Kenya should stop borrowing for at least 5 years ndio tulipe madeni to manageable levels,have all PPP projects and government projects be passed by at least 24 county’s so that meaningful public participation takes place and foster national cohesion.
The company said based on their calculations and projections, the road will need 5,000 vehicles a day for the toll to be viable. They say Nairobi expressway for instance meets that threshold but not Nairobi Mombasa highway.