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

THANK YOU