Kenya cancels $1.39bn highway deal with Vinci
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Kenya is adjusting its approach to large-scale projects such as roads in response to financial constraints
The Kenyan government has terminated a US $1.39bn highway expansion agreement with Vinci Highways. The project could potentially be awarded to a Chinese contractor, as confirmed by government officials and sources familiar with the matter.
The project, initially signed in Paris in 2020 during a visit by then-President Uhuru Kenyatta, aimed to transform a 140km single-lane road into a multi-lane highway connecting Nairobi to Nakuru, a city in Kenya's Rift Valley region.
The Kenya National Highways Authority (KeNHA) expressed dissatisfaction with the deal, stating that it was not favorable to the country. The agreement would have required the government to cover the costs if insufficient vehicles utilised the road. KeNHA attempted to modify the contract, but Vinci refused to agree, leading the government to cancel the deal, as per a report.
'KeNHA requested a restructuring of the contract but the proposal was considered unbankable thus creating a stalemate,' the agency stated. This led to the issuance of a formal termination notice, effectively ending the deal before any construction had begun.
The French-led group included Vinci Highways, Vinci Concessions, and private equity firm Meridiam. Two sources with direct knowledge of the government's plans revealed that the project is now expected to be handed over to a Chinese construction company, although the specific firm has not yet been publicly identified.
This shift follows a high-level visit to Beijing earlier this month by Kenya's Finance Minister John Mbadi, who led a delegation for talks with senior Chinese officials. Local media have also reported that President William Ruto is scheduled for a state visit to China later this month, signaling a strengthening of bilateral ties.
Kenya is adjusting its approach to large-scale projects like roads in response to financial constraints. To address these challenges, the country is collaborating with both Western and Chinese partners to develop its infrastructure and foster economic growth.
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