Road tolling is increasing in East Africa as the region’s countries expand highway networks - Shem Oirere writes. The drive towards road tolling in East Africa is gaining momentum. Uganda appears to have broken ranks with its neighbours to make huge strides in achieving progress with this innovative road financing plan. Road tolling has hitherto has been held back in East Africa for lack of political goodwill and State bureaucracies. Kenyan government officials have made announcements on planned road tollin
Nairobi is notorious for traffic congestion but road tolling could help pay for extra lanes on existing routes and cut delays
Road tolling is increasing in East Africa as the region’s countries expand highway networks - Shem Oirere writes.
The drive towards road tolling in East Africa is gaining momentum. Uganda appears to have broken ranks with its neighbours to make huge strides in achieving progress with this innovative road financing plan. Road tolling has hitherto has been held back in East Africa for lack of political goodwill and State bureaucracies.
Kenyan government officials have made announcements on planned road tolling projects. But little has been achieved on the side of policy formulation, project structuring and reviewing the existing road act to pave the way for privatisation of certain routes.
The country made a false start with road tolling when it terminated the planned concessioning of six sections under the Nairobi Urban Toll Road Concession in 2010 after the World Bank withdrew financing. The bank said it was “not prepared to participate in financing the consortium involved in the project as currently structured.”
In contrast, Uganda has unveiled concrete steps that provide valuable lessons for the rest of East Africa on how to implement road tolling, operate and maintain modern road networks. Uganda relies mainly on East Africa’s Northern Corridor for its export/import transport needs. It has completed a comprehensive feasibility study for the 77km Kampala-Jinja Expressway, which could be the region’s first truly tolled road by 2022.
The Expressway will also be complemented by the 18km Kampala Southern Bypass. The latter will link the Kampala-Jinja Expressway to the four-lane 51.4km Kampala-Entebbe Expressway currently being constructed under a US$476 million contract by China Communication Construction Company with financial support from China Export/Import Bank.
Privatisation of the two roads, the Kampala-Jinja Expressway (KJE) project, has been boosted by the passing of the public private partnership (PPP) Act of 2015, which is now operational. In addition, the government, through the Uganda National Roads Agency (UNRA) has appointed the International Finance Corporation (IFC) as transaction advisor for the project. “UNRA and its advisors have prepared and structured the legal, technical and economic aspects of the project,” said the roads agency in September 2015.
UNRA executive director Allen Kagina said during the market sounding forum in September that the event would provide a useful guide “in finalising the terms of the transaction (privatisation of the Expressway) and subsequent market launch.”
Transport and Works minister John Byabagambi told the forum that Uganda wants “to release the road sector from the cumbersome government procedures to allow or operate in a commercial and transparent manner.”
The $1.1 billion KJE will be implemented under a design, build, finance, operate, maintain and transfer model which UNRA said is “a PPP variant specifically authorised under the PPP Act of 2015.”
KJE includes the $800 million 77km Kampala-Jinja Expressway with a design speed of 120km/h and the four-lane 18km Kampala Southern Bypass which has a design speed of 100km/h. The Expressway will have eight lanes, four in each direction, in the first 3km; six lanes, three on each direction for the next 17km; and four lanes, two on each direction for the remaining 57km.
The Bypass connects the Kampala-Jinja Expressway to Kampala-Entebbe Expressway at Munyonyo and would cost an estimated $300 million.
Construction of KJE will be by a special purpose vehicle or Project Private Company that would be named in the third quarter of this year, according to the project timeline. UNRA will issue Request for Qualification this quarter, shortlist the applicants and procure an independent engineer for the project.
Request for Proposal bid documents are expected in the second quarter of 2016 while the signing of the 30-year concession agreement is slated for the last quarter of the year. The concession agreement period includes the five-year construction period of the Expressway.
The preferred bidder will commence phase one of the construction works in 2017 and complete it in 2020. This involves 32.5km from Kampala to Namataba at about 46% of the total project cost. Phase two of the project, involving 44.2km from Namataba to Jinja, would start in 2019 and be completed in 2022 at an estimated cost of 32% of the total project cost.
Construction of the 18km Kampala Southern Bypass, which would cost about 20% of the total project cost, would start in 2019 and be completed in 2022. The Kampala-Jinja Expressway will have nine toll stations under a closed toll system while the Kampala Southern Bypass will have three toll stations under an open toll system.
UNRA spokesperson Dan Alinange said the two roads were preferred for tolling because “there is a strong willingness to pay for an improved level of service.”
“We are aware there is enormous appetite for this sort of project and that is what gave us the confidence to structure Kampala-Jinja as a PPP.”
The concessionaire will operate and maintain the road under pre-agreed metrics and finance and construct the project. It will be a limited access tolled road according to UNRA and users will pay first before accessing the Expressway. The toll rates will be set by the government of Uganda and must be included in the Request for Proposal.
Uganda plans to privatise four additional roads as government efforts to improve road transport picks pace. UNRA lists the roads as 32km Kampala-Mpigi, 50km Kampala-Bombo, 100km Kampala-Outer Beltway (Outer Ring Road) and Kampala-Entebbe Expressway. The latter road will be later extended to Malaba on the Uganda/Kenya border and Katuna on the Uganda/Rwanda border.
UNRA said “they are high traffic roads/expressways that are expected to have sufficient cash flows to repay development and maintenance costs.”
In neighbouring Kenya, the government says it has picked transaction advisors to assist with the privatisation of at least three new roads including a 482km carriageway from Nairobi to Mombasa, an expanded 176km highway from Nairobi to Nakuru and the 28.6km Nairobi Southern Bypass.
The Infrastructure and Transport ministry said earlier it intended to float tenders for five toll road contracts worth $2 billion by May of 2015. The tender is yet to be advertised. However, the Director of PPP Unit at the National Treasury Stanley Kamau says progress has been made.
Although he said last year Nairobi Southern Bypass will not be “open to traffic unless there are tolls” no tolling has been launched since it was opened in April 2015.
Under the cancelled Nairobi urban toll road project, seven road sections totalling 106km within the city were to be put out to concession. All seven road sections were to undergo “rehabilitation of the existing two-lane single carriageways, while one section will also be upgraded to a four-lane dual carriageway.”
BKS Group of South Africa, an international consultant did the feasibility study and declared the project commercially viable. “Given the assumed traffic levels, calculations show that the estimated project costs can be recovered at acceptable toll rates,” the World Bank said before it pulled out of the project in 2010.
The concessionaire was to operate and maintain the roads sections for 30 years. The operator would have within that period carried out “road-related improvements, periodic and routine maintenance, construction costs of toll facilities as well as their operation and maintenance.”
The World Bank, through the International Development Agency, briefly considered a partial risk guarantee (PRG) for the concession to woo private sector participation in the project. The bank said the PRG was necessary to mitigate political and government-related risks, “particularly in countries where a sector is in early stages of reform and the perceived risk of policy reversals and changes to the regulatory framework is high”.
And although Kamau had promised in 2014 that Kenya would have new toll guidelines by April 2015 ahead of the toll road tendering process, progress is slow and the plan is yet to be implemented.
Kenya National Highways Authority manager for special projects Kefa Seda had also pledged in 2014 that the authority would ensure selected toll roads are introduced by 2017.
“The introduction of tolls might receive initial resistance as the public might not be aware of the benefits of toll roads,” he said. The government plans to hold road privatisation sensitisation forums to prepare road users for the planned change of road use, Seda said.
Initially, government officials said in addition to the new Nairobi-Mombasa carriageway, the expanded Nairobi-Nakuru highway and Nairobi Southern Bypass, the government also plans to toll the 50km Thika Superhighway, which is already in use.
However, the World Bank warns that “winning public support for fee-for-service is one of the most difficult things to do.”
With the support of the World Bank, Uganda held a market sounding forum in September 2015 which the government said would “provide feedback that would serve as a useful guide in finalising the terms of the transaction (privatisation) and subsequent market launch.”
With progress in Uganda and setbacks in Kenya, it remains to be seen how the push for better roads and additional financing from the private sector will influence road tolling in East Africa.
The drive towards road tolling in East Africa is gaining momentum. Uganda appears to have broken ranks with its neighbours to make huge strides in achieving progress with this innovative road financing plan. Road tolling has hitherto has been held back in East Africa for lack of political goodwill and State bureaucracies.
Kenyan government officials have made announcements on planned road tolling projects. But little has been achieved on the side of policy formulation, project structuring and reviewing the existing road act to pave the way for privatisation of certain routes.
The country made a false start with road tolling when it terminated the planned concessioning of six sections under the Nairobi Urban Toll Road Concession in 2010 after the World Bank withdrew financing. The bank said it was “not prepared to participate in financing the consortium involved in the project as currently structured.”
In contrast, Uganda has unveiled concrete steps that provide valuable lessons for the rest of East Africa on how to implement road tolling, operate and maintain modern road networks. Uganda relies mainly on East Africa’s Northern Corridor for its export/import transport needs. It has completed a comprehensive feasibility study for the 77km Kampala-Jinja Expressway, which could be the region’s first truly tolled road by 2022.
The Expressway will also be complemented by the 18km Kampala Southern Bypass. The latter will link the Kampala-Jinja Expressway to the four-lane 51.4km Kampala-Entebbe Expressway currently being constructed under a US$476 million contract by China Communication Construction Company with financial support from China Export/Import Bank.
Privatisation of the two roads, the Kampala-Jinja Expressway (KJE) project, has been boosted by the passing of the public private partnership (PPP) Act of 2015, which is now operational. In addition, the government, through the Uganda National Roads Agency (UNRA) has appointed the International Finance Corporation (IFC) as transaction advisor for the project. “UNRA and its advisors have prepared and structured the legal, technical and economic aspects of the project,” said the roads agency in September 2015.
UNRA executive director Allen Kagina said during the market sounding forum in September that the event would provide a useful guide “in finalising the terms of the transaction (privatisation of the Expressway) and subsequent market launch.”
Transport and Works minister John Byabagambi told the forum that Uganda wants “to release the road sector from the cumbersome government procedures to allow or operate in a commercial and transparent manner.”
The $1.1 billion KJE will be implemented under a design, build, finance, operate, maintain and transfer model which UNRA said is “a PPP variant specifically authorised under the PPP Act of 2015.”
KJE includes the $800 million 77km Kampala-Jinja Expressway with a design speed of 120km/h and the four-lane 18km Kampala Southern Bypass which has a design speed of 100km/h. The Expressway will have eight lanes, four in each direction, in the first 3km; six lanes, three on each direction for the next 17km; and four lanes, two on each direction for the remaining 57km.
The Bypass connects the Kampala-Jinja Expressway to Kampala-Entebbe Expressway at Munyonyo and would cost an estimated $300 million.
Construction of KJE will be by a special purpose vehicle or Project Private Company that would be named in the third quarter of this year, according to the project timeline. UNRA will issue Request for Qualification this quarter, shortlist the applicants and procure an independent engineer for the project.
Request for Proposal bid documents are expected in the second quarter of 2016 while the signing of the 30-year concession agreement is slated for the last quarter of the year. The concession agreement period includes the five-year construction period of the Expressway.
The preferred bidder will commence phase one of the construction works in 2017 and complete it in 2020. This involves 32.5km from Kampala to Namataba at about 46% of the total project cost. Phase two of the project, involving 44.2km from Namataba to Jinja, would start in 2019 and be completed in 2022 at an estimated cost of 32% of the total project cost.
Construction of the 18km Kampala Southern Bypass, which would cost about 20% of the total project cost, would start in 2019 and be completed in 2022. The Kampala-Jinja Expressway will have nine toll stations under a closed toll system while the Kampala Southern Bypass will have three toll stations under an open toll system.
UNRA spokesperson Dan Alinange said the two roads were preferred for tolling because “there is a strong willingness to pay for an improved level of service.”
“We are aware there is enormous appetite for this sort of project and that is what gave us the confidence to structure Kampala-Jinja as a PPP.”
The concessionaire will operate and maintain the road under pre-agreed metrics and finance and construct the project. It will be a limited access tolled road according to UNRA and users will pay first before accessing the Expressway. The toll rates will be set by the government of Uganda and must be included in the Request for Proposal.
Uganda plans to privatise four additional roads as government efforts to improve road transport picks pace. UNRA lists the roads as 32km Kampala-Mpigi, 50km Kampala-Bombo, 100km Kampala-Outer Beltway (Outer Ring Road) and Kampala-Entebbe Expressway. The latter road will be later extended to Malaba on the Uganda/Kenya border and Katuna on the Uganda/Rwanda border.
UNRA said “they are high traffic roads/expressways that are expected to have sufficient cash flows to repay development and maintenance costs.”
In neighbouring Kenya, the government says it has picked transaction advisors to assist with the privatisation of at least three new roads including a 482km carriageway from Nairobi to Mombasa, an expanded 176km highway from Nairobi to Nakuru and the 28.6km Nairobi Southern Bypass.
The Infrastructure and Transport ministry said earlier it intended to float tenders for five toll road contracts worth $2 billion by May of 2015. The tender is yet to be advertised. However, the Director of PPP Unit at the National Treasury Stanley Kamau says progress has been made.
Although he said last year Nairobi Southern Bypass will not be “open to traffic unless there are tolls” no tolling has been launched since it was opened in April 2015.
Under the cancelled Nairobi urban toll road project, seven road sections totalling 106km within the city were to be put out to concession. All seven road sections were to undergo “rehabilitation of the existing two-lane single carriageways, while one section will also be upgraded to a four-lane dual carriageway.”
BKS Group of South Africa, an international consultant did the feasibility study and declared the project commercially viable. “Given the assumed traffic levels, calculations show that the estimated project costs can be recovered at acceptable toll rates,” the World Bank said before it pulled out of the project in 2010.
The concessionaire was to operate and maintain the roads sections for 30 years. The operator would have within that period carried out “road-related improvements, periodic and routine maintenance, construction costs of toll facilities as well as their operation and maintenance.”
The World Bank, through the International Development Agency, briefly considered a partial risk guarantee (PRG) for the concession to woo private sector participation in the project. The bank said the PRG was necessary to mitigate political and government-related risks, “particularly in countries where a sector is in early stages of reform and the perceived risk of policy reversals and changes to the regulatory framework is high”.
And although Kamau had promised in 2014 that Kenya would have new toll guidelines by April 2015 ahead of the toll road tendering process, progress is slow and the plan is yet to be implemented.
Kenya National Highways Authority manager for special projects Kefa Seda had also pledged in 2014 that the authority would ensure selected toll roads are introduced by 2017.
“The introduction of tolls might receive initial resistance as the public might not be aware of the benefits of toll roads,” he said. The government plans to hold road privatisation sensitisation forums to prepare road users for the planned change of road use, Seda said.
Initially, government officials said in addition to the new Nairobi-Mombasa carriageway, the expanded Nairobi-Nakuru highway and Nairobi Southern Bypass, the government also plans to toll the 50km Thika Superhighway, which is already in use.
However, the World Bank warns that “winning public support for fee-for-service is one of the most difficult things to do.”
With the support of the World Bank, Uganda held a market sounding forum in September 2015 which the government said would “provide feedback that would serve as a useful guide in finalising the terms of the transaction (privatisation) and subsequent market launch.”
With progress in Uganda and setbacks in Kenya, it remains to be seen how the push for better roads and additional financing from the private sector will influence road tolling in East Africa.
