By Issa Hussein - Reporter
Kenya, 9 July 2026 - The government has terminated the original Public-Private Partnership (PPP) agreement for the Nairobi-Nakuru-Mau Summit Highway, saying the deal would have exposed taxpayers to up to Sh200 billion in funding obligations over the first 15 years.
In a statement on Wednesday, National Treasury Cabinet Secretary John Mbadi said the decision followed a review of the project, which found that the agreement was no longer financially viable following changes in the country's economic conditions.
The review considered the impact of global inflation, the depreciation of the Kenya shilling and rising public debt servicing costs between 2020 and 2022.
Under the original agreement, structured as an Availability Payment PPP,the government would have been required to pay the concessionaire about Sh23 billion annually, with the amount subject to inflation and foreign exchange adjustments.
The Treasury said the arrangement also left the government bearing the demand and revenue risks throughout the concession period.
"The reassessment undertaken by the Government established that the original project agreement no longer aligned with the fiscal objectives necessary to support sustainable infrastructure financing," Mbadi said.
According to the Treasury, the review projected a cumulative funding gap of up to Sh200 billion during the first 15 years of the concession if the original model had been retained.
The government has instead adopted a User-Pay Toll PPP model, under which motorists using the highway will pay toll fees while the private investor assumes the demand and revenue risks.
The revised agreements were signed in May and June this year after the Kenya National Highways Authority (KeNHA) received a new proposal based on the alternative financing model.
The new arrangement eliminates the government's annual payment obligation of Sh23 billion and reduces the estimated project cost from Sh250 billion to Sh174 billion,representing savings of about Sh76 billion.
The Treasury said the government will also receive 60 per cent of revenues generated above an agreed 16 per cent equity internal rate of return threshold.
Mbadi said the revised framework would reduce pressure on public finances by attracting private capital while safeguarding resources for other national development priorities.
"The lessons learned from the terminated concession have strengthened the Government's approach to infrastructure financing. We will continue to apply these principles in the stewardship of long-term infrastructure investments," he said.
The Nairobi-Nakuru-Mau Summit Highway is one of Kenya's busiest transport corridors, linking the capital to the Rift Valley, western Kenya and neighbouring countries in the East African region. The expansion of the highway is expected to ease congestion, reduce travel time and improve the movement of goods and passengers along the Northern Corridor.
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