World Bank Group Will Not Participate in Financing of Nairobi Toll Road Project

February 2, 2011

NAIROBI, February 2, 2011—The World Bank today issued the following statement out of Kenya.

  • In November 2007, the Kenyan government agreed to work with Strabag AG and Housing and Construction Holding Company to design, construct, finance, and operate a 106-kilometer section of the proposed Nairobi Toll Road (NTR) project, on a 30-year concessional basis.
  • After completing a detailed review and due diligence on the project and its sponsors, including a compliance review conducted by external counsel, the World Bank found that the systems and approach to compliance procedures would not be commensurate with the circumstances of this project and the governance risks facing this sector. Accordingly, the World Bank Group is not prepared to participate in financing the consortium involved in this project as currently structured.
  • Relieving traffic congestion in Nairobi is an important infrastructure undertaking for Kenya, and the World Bank Group desires to see a durable solution as quickly as possible. It is up to the government to determine whether it wishes to proceed with the NTR project (without World Bank Group financing) or pursue other options to achieve this objective.
  • If the Government of Kenya so desires, the World Bank Group would be prepared to finance a concession undertaken by Strabag, on the condition that Strabag agrees to expand its integrity compliance procedures and training programs to cover the company more completely. Any World Bank Group support for a road construction project in Kenya would need to comply with Bank Group social and environmental safeguards as well as Kenyan law, including for any land acquisition. World Bank Group participation in any restructured NTR project would involve consultation with parties along the proposed route and respect existing court decisions.
  • The World Bank Group remains committed to partnering with the Government of Kenya in its efforts to improve the country’s road network and urban infrastructure. Over the past five years, the World Bank Group has provided over US$460 million (KShs 37 billion) in financing and private sector investment guarantees to Kenya’s road sector. Major projects completed through this support, and that of other partners, include rehabilitation of the Northern Corridor (Mombasa-Malaba) transport system. Support for major roads projects such as the Kisumu-Kakamega-Webuye-Kitale corridor is currently under consideration. The World Bank Group has also helped develop the underlying governance structures for the public-private partnerships that have helped fast-track progress in the road sector.
  • Under the World Bank Group’s 2010 Country Partnership Strategy for Kenya, further support for the road sector of over US300 million (KShs 24 billion) is envisaged over the next three years.
  • As part of the process to improve the management of the sector and mitigate inherent risks, the Government is implementing a Governance and Integrity Action Plan in the roads sector, with the support of the World Bank Group. Successful execution of this initiative is central to mitigating the many risks in this sector and we are seeing the results in the ongoing improvements in the country’s road network.

Johannes Zutt

World Bank Country Director, Kenya

February 2, 2011

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