Strabag wins €740m Kenyan road PPP

The project takes the Austrian construction company’s PPP portfolio to 30 projects. Revenues will be generated by direct toll collection but the World Bank is hedging risk by guaranteeing toll collection and political risk.

Austrian construction company Strabag has won a contract to build and operate a 106 kilometre toll road in Kenya as part of a €740 million public-private partnership with the local government.

Strabag will develop the project alongside 50:50 partner Shikun & Binui, an Israeli construction company. The two companies intend to sign a contract with the Kenyan authorities in January 2010 and reach financial close in the second half of the year.

Strabag said it will recoup its investment in the project – which includes €475 million in capital expenditure – by collecting tolls. As such, Strabag’s investment will be fully exposed to traffic risk. But a spokeswoman from the company said the project has the full backing of the World Bank, which is guaranteeing toll collection and political risk.

Hans Peter Haselsteiner, Strabag’s chief executive officer said in a statement that the project will grow Strabag’s PPP portfolio to 30 projects and increase its presence in Non-European markets.

The project involves refurbishing and expanding some 45 kilometres of the Nairobi Bypass within four years and operating the full 106-kilometre road for 30 years.