Nairobi Expressway Faces KSh 1.2 Billion Loss in Two Years

(Nairobi) – Kenya’s first major private-public partnership (PPP) project, the Nairobi Expressway, recorded a KSh 1.2 billion ($9.23 million) loss between July 2023 and June 2024, highlighting operational challenges despite its transformative potential.

Treasury disclosures presented to Parliament show the expressway generated KSh 4.6 billion ($35.38 million) in revenue during the fiscal year, while operational costs reached KSh 5.8 billion ($44.61 million). The project, operated by China Roads and Bridges Construction (CRBC) through its subsidiary Moja Expressway, is expected to be managed for 30 years under a concession agreement as the investor seeks to recoup its investment.

Other PPP projects have reported more positive outcomes. The 35MW Sosian Menengai geothermal power plant recorded a KSh 2.3 billion ($17.68 million) profit, while road annuity ventures brought in approximately KSh 350 million ($2.69 million) each.

The expressway, a flagship under China’s Belt and Road Initiative, has reduced travel time between Jomo Kenyatta International Airport (JKIA) and Nairobi’s central business district from two hours to just 20 minutes. On average, 11,000 vehicles use the highway daily.

Despite its benefits, the expressway has struggled to break even due to several challenges. One of the main hurdles has been currency fluctuations. Tolls are collected in Kenyan Shillings, but the investor must service a dollar-denominated loan, which adds significant exchange rate losses. Currently, the Kenyan Shilling trades at approximately 130 per USD, resulting in conversion losses of up to 38%, according to project officials.

Revenue shortfalls have also been attributed to lower-than-expected traffic. Although vehicle numbers have grown, they remain below the projections in the financing model. Management has avoided adjusting toll rates frequently, citing the need to attract more motorists and balance affordability with financial sustainability.

The last toll review occurred in January 2024, two years after the expressway began operations. Although the agreement allows annual rate adjustments, officials have avoided increases due to the prevailing tough economic climate.

CRBC officials have emphasized that the expressway places no financial burden on Kenyan taxpayers. However, the project’s financial strain continues to be borne by the operator.

“Toll rates are our main tool to sustain the project and maintain investor confidence,” an official noted, adding that the operator has absorbed losses caused by high operational costs and exchange rate challenges.

As the expressway enters its third year, operators and stakeholders face a delicate balancing act—attracting more motorists while addressing financial sustainability without overburdening users.