PHOTOS - Uhuru has commissioned this massive Sh65 billion superhighway in Nairobi today

[Kevin85ify]

With this road Kenya will have broken another milestone in east and central africa. We will be the only country in east and central africa to have an elevated highway. We broke the record in roads in east and central africa with Thika road and it seems it is upto us to break our own record now with an elevated highway.

 

[Kevin85ify]

With this road, Kenya will have broken another milestone in east and central africa. We will be the only country in east and central africa to have an elevated highway. We broke the record in roads in east and central africa with Thika road and it seems it is upto us to break our own record now with an elevated highway.

 

[KENPAULITE]

By the way I was passing through ruaka going to limuru to check out a chilli farmer, and I noticed a lot of road construction activity. It seems the road from ruaka,passing through ndenderu all the way to Nairobi-Nakuru highway junction in limuru will be a dual carriage way highway. The construction stretch started from ruaka all the way to around st. pauls university in tigoni.

Then it connects with western bypass at Ndenderu, no wonder cytonn is building massively around those areas

 

[eliakeem]

FYI James gichuru to Rironi ksh 23b section is funded by GOK through budget. It is not a loan as world bank pulled out.
A large section of it is concrete paving to last longer

Expressway will be complete by August 2022
eliakeem no where has it been said that the GOK is guaranteeing any loan. You are pushing that assumption with no information.
Kenha has said profit or loss is absorbed by crbc. GOK is only providing land in the partnership.

Please you would quote the entire post so as I could recall what was the issue being discussed.
But regarding the Mechanics of PPP the government guarantee is the order of the day, since no investor can afford to lose his/her monies. The investors are aware how risky when it comes closing the deal with the government. So apart from the careful and systematical allocation of the project risks between the partnering entities, the cover or a shield from the state is of utmost important to make the investors confident to dish out their money to finance the project.

 

[Kifaru_07]

Please you would quote the entire post so as I could recall what was the issue being discussed.
But regarding the Mechanics of PPP the government guarantee is the order of the day, since no investor can afford to lose his/her monies. The investors are aware how risky when it comes closing the deal with the government. So apart from the careful and systematical allocation of the project risks between the partnering entities, the cover or a shield from the state is of utmost important to make the investors confident to dish out their money to finance the project.

Again, you are basing your opinion on your assumptions not on facts. This is a private development. Guarantees have not been given by government unlike when a a parastatal like kengen takes a loan to build a dam and pays via power revenue. See OFFICIAL response KENHA on the same.

 

[eliakeem]

Again, you are basing your opinion on your assumptions not on facts. This is a private development. Guarantees have not been given by government unlike when a a parastatal like kengen takes a loan to build a dam and pays via power revenue. See OFFICIAL response KENHA on the same.

The thing to understang is that, private comparator is not going to invest his money, but a large some of the project capital is going to be secured from the bank. Athough is going to get money under project finance arrangement, the government guarantee is very important to reach the financial clouser. The governnment guarantee is one of the financial contract/pact requirements. I'm talking through experience as I've been involved in a number of PPP project transaction advisory teems.

 

[Kevin85ify]

The thing to understang is that, private comparator is not going to invest his money, but a large some of the project capital is going to be secured from the bank. Athough is going to get money under project finance arrangement, the government guarantee is very important to reach the financial clouser. The governnment guarantee is one of the financial contract/pact requirements. I'm talking through experience as I've been involved in a number of PPP project transaction advisory teems.

You seem to be confused. I can tell you do not have much knowledge of project financing or ppp as claimed, if you do then it is quite limited in scope ie Your experience is wanting.

i) Of course the private contractor will take a loan from a bank kshs 65 billion is not pocket change for buying bread. About 60% of the project can be leveraged and the rest be raised through equity and company cash reserves. This is called leverage and banks will assess the financial viability of the project presented by the contractor and the bank expects the contractor to pay it back with interest. This is not unique to ppp but across all businesses ie You can not claim it is not the contractors money because the contractor is putting up his own assets on the chopping board.

ii) GOK only provided the wayleave for the project and data on how many vehicles use mombasa road.

iii) The contractor recoups their investment plus profit over time hence the toll charges.

iv) Government financial commitment is only needed when the contractor thinks the risk is high(This is where you are making assumptions as clearly illustrated by Kifaru_07). This is not the situation in Kenya.

v) GOK will not put any money down on this project design, construction or maintenance. GOK only put money into financing a feasibility study which it sold to would be investors to design, build and maintain the road.

NB: If indeed you have been in ppp advisory teams as claimed, then surely you will realize that economic and risk conditions differ in each country. Thus different models are used in different countries. The higher your risk the more likely an investor will ask government to also put down some form of financial commitment.

 

[MK254]

You seem to be confused. I can tell you do not have much knowledge of project financing or ppp as claimed, if you do then it is quite limited in scope ie Your experience is wanting.

i) Of course the private contractor will take a loan from a bank kshs 65 billion is not pocket change for buying bread. About 60% of the project can be leveraged and the rest be raised through equity and company cash reserves. This is called leverage and banks will assess the financial viability of the project presented by the contractor and the bank expects the contractor to pay it back with interest. This is not unique to ppp but across all businesses ie You can not claim it is not the contractors money because the contractor is putting up his own assets on the chopping board.

ii) GOK only provided the wayleave for the project and data on how many vehicles use mombasa road.

iii) The contractor recoups their investment plus profit over time hence the toll charges.

iv) Government financial commitment is only needed when the contractor thinks the risk is high(This is where you are making assumptions as clearly illustrated by Kifaru_07). This is not the situation in Kenya.

v) GOK will not put any money down on this project design, construction or maintenance. GOK only put money into financing a feasibility study which it sold to would be investors to design, build and maintain the road.

NB: If indeed you have been in ppp advisory teams as claimed, then surely you will realize that economic and risk conditions differ in each country. Thus different models are used in different countries. The higher your risk the more likely an investor will ask government to also put down some form of financial commitment.

Duh!! Hii ni darasa, people should be paying for these kind of classes they get from Kenyans.

 

[eliakeem]

You seem to be confused. I can tell you do not have much knowledge of project financing or ppp as claimed, if you do then it is quite limited in scope ie Your experience is wanting.

i) Of course the private contractor will take a loan from a bank kshs 65 billion is not pocket change for buying bread. About 60% of the project can be leveraged and the rest be raised through equity and company cash reserves. This is called leverage and banks will assess the financial viability of the project presented by the contractor and the bank expects the contractor to pay it back with interest. This is not unique to ppp but across all businesses ie You can not claim it is not the contractors money because the contractor is putting up his own assets on the chopping board.

ii) GOK only provided the wayleave for the project and data on how many vehicles use mombasa road.

iii) The contractor recoups their investment plus profit over time hence the toll charges.

iv) Government financial commitment is only needed when the contractor thinks the risk is high(This is where you are making assumptions as clearly illustrated by Kifaru_07). This is not the situation in Kenya.

v) GOK will not put any money down on this project design, construction or maintenance. GOK only put money into financing a feasibility study which it sold to would be investors to design, build and maintain the road.

NB: If indeed you have been in ppp advisory teams as claimed, then surely you will realize that economic and risk conditions differ in each country. Thus different models are used in different countries. The higher your risk the more likely an investor will ask government to also put down some form of financial commitment.

nr. i. That is a normal project financing mechanics. Even in the traditional procurement arrangement thit is how done.

nr. ii. The government contributes the way leave together with other permits and rights. This sort of risk is beared by the state.

nr. iii. Yes, you need toll policy and facilities.

nr. iv. Government Financial Commitment cannot be loosely used as Government Guarantee. Like wise Funding and financing. In strictly term, of finance, especially the PPP, the two are never synonymous. They can never be used interchangeably. This is a centre of the discusion. The GoK is not obliged to set aside a budget to implement the project (in PPP we call it a "cash motivation"). However, in case of anything happens to impede the cash flow threshod ratio during project operation, the GoK has to top up for the difference.

nr. v. The first sentence has been answered in nr. iv. above. The second sentence talks about feasibility study cost. This is known as project sunk cost. It is normally not included in the project cost, although it is a bit expensive. The feasbility study is important doc which used as a yard stick against the proposals submitted by the prospective investors during the procurement.

Note: It good that I'm engaging the discussion with the fellow PPP expert. Hope to give more PPP inssight to each other.

 

[Kevin85ify]

nr. i. That is a normal project financing mechanics. Even in the traditional procurement arrangement thit is how done.

nr. ii. The government contributes the way leave together with other permits and rights. This sort of risk is beared by the state.

nr. iii. Yes, you need toll policy and facilities.

nr. iv. Government Financial Commitment cannot be loosely used as Government Guarantee. Like wise Funding and financing. In strictly term, of finance, especially the PPP, the two are never synonymous. They can never be used interchangeably. This is a centre of the discusion. The GoK is not obliged to set aside a budget to implement the project (in PPP we call it a "cash motivation"). However, in case of anything happens to impede the cash flow threshod ratio during project operation, the GoK has to top up for the difference.

nr. v. The first sentence has been answered in nr. iv. above. The second sentence talks about feasibility study cost. This is known as project sunk cost. It is normally not included in the project cost, although it is a bit expensive. The feasbility study is important doc which used as a yard stick against the proposals submitted by the prospective investors during the procurement.

Note: It good that I'm engaging the discussion with the fellow PPP expert. Hope to give more PPP inssight to each other.

Good we can agree on something. By the way I am not a PPP expert, I am just really talented in finance especially transfer of risk and I know how big projects are financed.
I also know how to get rid of losses through holder companies to hold all the bad assets. I also have experience in making money from bad companies by cutting them up into small pieces and selling them off. All the tricks I learnt from hedge funds and portfolio management.

 

[Oii]

Si nmeandika hapo jamaa ama hujui kusoma

Sasa me najua kangemi ilipo, ipo Nairobi au wapi.

 

[Zigi Rizla]

Sasa me najua kangemi ilipo, ipo Nairobi au wapi.

Google

 

[eliakeem]

Good we can agree on something. By the way I am not a PPP expert, I am just really talented in finance especially transfer of risk and I know how big projects are financed.
I also know how to get rid of losses through holder companies to hold all the bad assets. I also have experience in making money from bad companies by cutting them up into small pieces and selling them off. All the tricks I learnt from hedge funds and portfolio management.

Yaa yaa that is good. To have the finance knowledge is good for PPP projects, though PPP is a thick forest which comprises a lot of disciplines. Normally includes law, procurement, finance (particularly the project finance), project management etc, plus a sector technical know how. Here I mean, if the PPP project fall under solid waste management, then the environmental management experts have to champion it, likewise to the power (waste to energy, hep, geothermal etc), ports, airports, roads, schools, prisons (like what Chinese are currently doing).
The thing to remember is in any PPP project the govt have to make the investors confident by providing the guarantee. As I explained in the previous post, the govt will make sure to pay the investor when the amount of money that was expected to come in never achieved. This is a fundamental principle in risk allocation in PPP project. I refers to the projects which the monies to fund the project come from user fees. It has nothing to do if the project is funded by availability payment.

 

[Kevin85ify]

Yaa yaa that is good. To have the finance knowledge is good for PPP projects, though PPP is a thick forest which comprises a lot of disciplines. Normally includes law, procurement, finance (particularly the project finance), project management etc, plus a sector technical know how. Here I mean, if the PPP project fall under solid waste management, then the environmental management experts have to champion it, likewise to the power (waste to energy, hep, geothermal etc), ports, airports, roads, schools, prisons (like what Chinese are currently doing).
The thing to remember is in any PPP project the govt have to make the investors confident by providing the guarantee. As I explained in the previous post, the govt will make sure to pay the investor when the amount of money that was expected to come in never achieved. This is a fundamental principle in risk allocation in PPP project. I refers to the projects which the monies to fund the project come from user fees. It has nothing to do if the project is funded by availability payment.

Agreed but it depends on the model of PPP chosen. This project is based on the Design-Build-Own-Operate-Transfer model, a variation of BOT(Build-Own-Transfer) i.e. during the concession period the road is owned by the contractor not GOK thus GOK has no responsibility to make sure the contractor achieves his financial targets weekly, monthly or annually.
It is upto the contractor to make the project attractive to would be customers who are vehicle owners. The only assurance from GOK during the concession, is payment for mass transit buses that will also use the road nothing else.That is why the concession period is long and the contractor negotiates with banks to provide financing on a non recourse basis.
The model you talk about is common in the energy sector where a private company builds a power station and the government has to provide an assured offtaker of the power.
A couple of PPP projects might involve changes to the law of the land but not all if current laws are sufficient eg Kenya has a long history of PPP in the energy sector and since 1985 Kenya has not needed any more changes to laws governing the PPP projects in the energy sector.

 

[eliakeem]

Agreed but it depends on the model of PPP chosen. This project is based on the Design-Build-Own-Operate-Transfer model, a variation of BOT(Build-Own-Transfer) i.e. during the concession period the road is owned by the contractor not GOK thus GOK has no responsibility to make sure the contractor achieves his financial targets weekly, monthly or annually.
It is upto the contractor to make the project attractive to would be customers who are vehicle owners. The only assurance from GOK during the concession, is payment for mass transit buses that will also use the road nothing else.That is why the concession period is long and the contractor negotiates with banks to provide financing on a non recourse basis.
The model you talk about is common in the energy sector where a private company builds a power station and the government has to provide an assured offtaker of the power.
A couple of PPP projects might involve changes to the law of the land but not all if current laws are sufficient eg Kenya has a long history of PPP in the energy sector and since 1985 Kenya has not needed any more changes to laws governing the PPP projects in the energy sector.

Kevin, it's good that you even understand different PPP models. I advice you to go through on the mechanics of Govt Guarantee which indeed has both financial and non financial covenants. One of it, is the investor will not allow the govt authority, responsible for roads, to establish or to maintain the, closest, alternative roots which will negatively impact the demand of the toll road. Most of the public partners ignore this aspect. But in long term this may cause the conflict between contracting parties. That is the situation in infrastructure especially toll roads. It's not applicable in an availability payment arrangement.
In Energy sector, most PPA need the Govt to guarantee the capacity charge. The investor needs his cash flow and the bottom line to be maintained. In the first place the Govts find this is a soft covenant, but as time flies, this again becomes the source of most partnerships to get into frictions. The off taker becomes unhappy to honor this covenant.
What can say, the guarantee is there to stay regardless the model of PPP or the sector, coz is the only thing that gives him a buffer once any misfortune happened.

 

[Oii]

Google

Kafie mbele

 

[mwaswast]

Yaa yaa that is good. To have the finance knowledge is good for PPP projects, though PPP is a thick forest which comprises a lot of disciplines. Normally includes law, procurement, finance (particularly the project finance), project management etc, plus a sector technical know how. Here I mean, if the PPP project fall under solid waste management, then the environmental management experts have to champion it, likewise to the power (waste to energy, hep, geothermal etc), ports, airports, roads, schools, prisons (like what Chinese are currently doing).
The thing to remember is in any PPP project the govt have to make the investors confident by providing the guarantee. As I explained in the previous post, the govt will make sure to pay the investor when the amount of money that was expected to come in never achieved. This is a fundamental principle in risk allocation in PPP project. I refers to the projects which the monies to fund the project come from user fees. It has nothing to do if the project is funded by availability payment.

Agreed but it depends on the model of PPP chosen. This project is based on the Design-Build-Own-Operate-Transfer model, a variation of BOT(Build-Own-Transfer) i.e. during the concession period the road is owned by the contractor not GOK thus GOK has no responsibility to make sure the contractor achieves his financial targets weekly, monthly or annually.
It is upto the contractor to make the project attractive to would be customers who are vehicle owners. The only assurance from GOK during the concession, is payment for mass transit buses that will also use the road nothing else.That is why the concession period is long and the contractor negotiates with banks to provide financing on a non recourse basis.
The model you talk about is common in the energy sector where a private company builds a power station and the government has to provide an assured offtaker of the power.
A couple of PPP projects might involve changes to the law of the land but not all if current laws are sufficient eg Kenya has a long history of PPP in the energy Great @sector and since 1985 Kenya has not needed any more changes to laws governing the PPP projects in the energy sector.

Now this is how to make Africa Great Again sio kila saa Kenya vs Tanzania.

 

[and 300]

Safi sana, Indians wa Westlands wanajivujia kuwa Wakenya, Wakenya wa Muranga zamu yenu inakuja.

Nakuru lini?

 

[and 300]

Bongo hakuna toll road!! Dar unaisikia tu wewe! Halafu toll road siyo kitu cha kujivunia.

Mbona unailipia kwenye mafuta?

 

[Zigi Rizla]