Nairobi Expressway Posts Ksh 1.2 Billion Loss

The Nairobi Expressway, Kenya’s flagship public-private partnership (PPP) project, recorded a Sh1.2 billion loss for the financial year between July 2023 and June 30, 2024.

This loss highlights the struggles of the ambitious project, which was once celebrated as a milestone in infrastructure development under the Belt and Road Initiative.

According to Treasury disclosures recently tabled in Parliament, the expressway earned Sh4.6 billion over the year.

However, operating costs incurred by the Chinese investor, China Roads and Bridges Construction (CRBC), amounted to Sh5.8 billion, resulting in a significant financial shortfall.

The report also highlighted the performance of other PPP projects, such as the Sosian Menengai geothermal power plant, which posted a Sh2.3 billion profit, and roads annuity ventures that made profits of about Sh350 million each.

These contrasting outcomes underline the unique challenges facing the Nairobi Expressway, despite its critical role in improving travel efficiency.

The expressway, operated by Moja Expressway—a subsidiary of CRBC—has transformed travel between Jomo Kenyatta International Airport (JKIA) and Nairobi’s Central Business District (CBD).

Reducing travel time from two hours to just 20 minutes, the highway has become a vital artery for Kenya’s capital.

However, the financial sustainability of the project remains uncertain.

Moja Expressway is tasked with managing the highway for 30 years to recover the investment costs.

Currently, daily traffic averages 11,000 vehicles, which falls short of the target set in the project’s financing model.

While the numbers have grown since operations began, they have not reached the critical mass required to break even.

Currency fluctuations and rising interest rates have compounded the challenges. The project’s financing was secured in US dollars, requiring the investor to purchase dollars for loan repayments.

“It is still a big loss because collection at the site is in Kenya Shillings. Every shilling we collect, we convert to USD and could lose up to 38 per cent,” an official explained. With toll revenue failing to meet expectations, the cost of foreign exchange conversion has become a significant burden.

“We bear the loss again and again… toll rates are a way to sustain the project and give the investor confidence,” the official added.

While the government has the authority to review toll rates annually, adjustments have been slow due to economic challenges.

The last toll review took place in January 2024, marking two years since the expressway began operations.

“We need to increase but we will not… the cost will be borne by the operator,” the official stated, emphasizing that current economic conditions have made higher toll rates unfeasible.

Management highlights that several factors influencing toll rates, including operational costs and financial risks, have risen over time.

However, raising rates could discourage motorists, further limiting traffic growth—a tactical balancing act for the operator.

Despite its struggles, the Nairobi Expressway remains a symbol of modern infrastructure and a critical component of Kenya’s transport network.

Its financial challenges underscore the complexities of PPP ventures, particularly in emerging economies facing currency volatility and shifting economic conditions.

For now, Moja Expressway continues to navigate the dual challenges of increasing traffic volumes and managing currency losses, hoping to eventually achieve financial sustainability.