This transformative project promises to cut travel time between Nairobi and Mombasa from 10 hours to just 4, easing congestion on one of East Africa's most vital trade routes.

The expressway will follow the alignment of the existing A109 Road, a crucial artery in the Northern Corridor linking Mombasa to landlocked neighbors like Uganda and Rwanda. Construction is expected to take 3-4 years, though no start date has been announced.

In this article:

1. A History of Delays and the New Path Forward – Why the initial deal with Bechtel Corporation stalled and how Everstrong Capital is taking a different approach.

2. EPC vs. Toll Model: What’s the Difference? – A breakdown of the two financing models and why Kenya opted for a toll-based P3 model.

3. Lessons from Previous P3 Projects – Insights from past infrastructure projects like the Thika Superhighway.

4. Why Everstrong Capital Took the Risk Where Bechtel Hesitated – The motivations behind Everstrong’s investment and their long-term vision for African infrastructure.

5. Everstrong’s Bold Vision for Africa’s Infrastructure Future – How this project sets a precedent for future public-private collaborations in Africa.

A HISTORY OF DELAYS AND THE NEW PATH FORWARD

In 2019, construction was suspended after Kenya hit its debt ceiling, halting the project for nearly two years.

The government’s suspension was a result of fiscal constraints and growing concerns over the country’s debt levels, which had reached unsustainable levels.

These financial challenges made it difficult to move forward with such a large-scale infrastructure project in a country grappling with mounting debt.

This setback further complicated the situation for Bechtel, which had been pushing for an Engineering, Procurement, and Construction (EPC) model.

The disagreement over financing and the country's ability to take on additional debt led to delays.

Now, with new financial backing and a shift in approach, Everstrong Capital is moving the Nairobi-Mombasa Expressway forward under the P3 model.

As the project takes shape under this new agreement, understanding the difference between the two financing models (EPC and P3) helps explain the path forward.

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EPC vs. TOLL MODEL: WHAT’S THE DIFFERENCE?

1. EPC Model (Engineering, Procurement, and Construction)

• Structure: In an EPC model, a single contractor or consortium is responsible for the design, procurement of materials, and construction of the project. The contractor delivers the project for a fixed price and is accountable for ensuring it is completed according to specifications, timeframes, and budgets.

• Payment: The government or client typically pays the contractor upfront or in agreed installments for the entire construction cost. This model doesn’t rely on toll revenue for project financing.

• Risk: The contractor bears the risk of delivering the project on time and within budget.

• Bechtel's Preference: Bechtel argued that the EPC model would provide better value for money because the costs would be paid upfront, and there wouldn't be the added complexity or long-term uncertainty of relying on toll revenue for funding.
  
  

2. Toll Model (Public-Private Partnership, or P3)

• Structure: In a toll model, the private sector (typically a contractor or consortium) builds, finances, and operates the project. After completion, the project is often operated as a toll road where users pay to use the infrastructure (e.g., drivers paying toll fees).

• Payment: The contractor or consortium recoups its investment through the toll fees paid by road users over time. This model often involves a revenue-sharing agreement between the public and private sectors.

• Risk: The private partner bears the risk of traffic volumes and revenue generation, as the profitability depends on how many people use the road and how much they pay in tolls.

• Kenya's Approach: The Kenyan government favored this model as a way to mitigate upfront costs and allow the private sector to finance and operate the expressway. Bechtel, however, felt this model would not provide optimal value since the contractor would bear significant financial risk over time.

LESSONS FROM PREVIOUS P3 PROJECTS

These projects have provided valuable lessons on the challenges and benefits of engaging private sector partners in large-scale developments.

For instance, the Thika Superhighway was funded through a toll system, offering a blueprint for how public-private collaborations can work to reduce government burden while still achieving ambitious infrastructure goals.

The EPC model offers a straightforward, fixed-price approach with guaranteed upfront payment, ensuring the project stays on schedule and within budget.

The toll model, on the other hand, hinges on long-term financial sustainability, with the private sector taking on the risk of generating revenue through toll fees.

WHY EVERSTRONG CAPITAL TOOK THE RISK WHERE BECHTEL HESITATED

Everstrong’s decision to invest in the Nairobi-Mombasa Expressway reflects its distinct focus on late-stage infrastructure development opportunities in Africa.

The firm has a clear vision for the region, with a stated commitment to supporting development across key sectors.

In fact, they have strategically positioned themselves to benefit from projects like this one, which align with their mission of driving growth in Africa’s infrastructure landscape.

For them, this project isn’t just about construction. It’s about fostering sustainable economic development in East Africa. The expressway offers a chance to contribute to the region’s infrastructure and connect vital trade hubs, which could have a ripple effect on Africa’s economic growth.

It also provides an opportunity to build on their other investments such as electric vehicles and renewable energy infrastructure, positioning them as key players in the region's future growth.

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EVERSTRONG’S BOLD VISION FOR AFRICA’S INFRASTRUCTURE FUTURE

Their focus on late-stage infrastructure opportunities allows them to take a longer-term view, understanding that large-scale projects, especially in developing markets, come with their own set of challenges and risks.

But with these risks come the potential for high rewards, especially if they are positioned as key players in the future of Africa’s infrastructure.

Bechtel, on the other hand, was hesitant to commit to a toll-based model due to the unpredictability of revenue generation over time. By relying on traffic volumes and toll fees, Bechtel would have faced a greater degree of uncertainty.

This concern over long-term financial risks, particularly in an emerging market like Kenya, led them to prefer the more controlled EPC model, where costs are paid upfront.

With their established presence in Kenya and South Africa, Everstrong has the regional experience and the patience to see projects like the Nairobi-Mombasa Expressway through, even if it means navigating the uncertainties of toll revenue.

Ultimately, their willingness to take on the project highlights a bold and strategic vision for the future of African infrastructure, one that aligns with both the risks and rewards inherent in large-scale investments.

THE FUTURE OF THE NAIROBI-MOMBASA EXPRESSWAY

This decision will ultimately shape the success and legacy of the expressway.

By opting for the P3 model, Kenya hopes to mitigate initial costs while securing private sector involvement for long-term operations.

The outcome of this financing approach will not only impact the expressway itself but could set the stage for future infrastructure projects across Africa, where similar challenges of financing and risk management persist.

FINAL THOUGHTS

While Bechtel’s preference for the EPC model highlighted concerns about upfront costs and risk management, Everstrong’s decision underscores a different approach, one rooted in fostering sustainable growth and unlocking the region’s economic potential.

By aligning their investment with Africa’s broader developmental goals, Everstrong Capital isn’t just building a highway, they’re paving the way for a connected, thriving future for East Africa.

As Kenya moves forward with this transformative project, the Nairobi-Mombasa Expressway could set a new benchmark for how public and private sectors can collaborate to deliver infrastructure that serves both immediate needs and long-term aspirations.

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P.S.

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