Infrastructure Finance and Public Private Partnerships (IFPPP) Project

The Infrastructure Finance and Public Private Partnerships (IFPPP) Project is a Government of Kenya “first of a two-phased” Adaptable Lending Program (APL) financed by a credit from the International Development Association (IDA). The credit became effective on 12th February 2013.

The overall objective of the IFPPP Project is to provide technical assistance to increase private investment in the Kenyan infrastructure market and to sustain this participation over an extended period of time.

By helping to strengthen the PPP enabling environment/framework, the IFPPP APL phase I project will assist the GoK to develop a solid foundation to systematically prepare PPPs and realize the benefits of PPPs more effectively, including:

  • increased private investments in infrastructure;
  • increased employment opportunities;
  • improved service delivery to enterprises and the population in general;
  • an improved fiscal impact on government from better project preparation;
  • more balanced risk allocation;
  • increased transparency;
  • wider quality control;
  • greater efficiency; and
  • enhanced financial sector support. 

This framework will also enable an increase in the availability and quality of infrastructure in different sectors to boost enterprise growth and productivity and improve the well-being of Kenyans.

The IFPPP Project comprises of four components:

  • Component 1: Support institutional development and regulatory reform;
  • Component 2: Support preparation of a pipeline of PPP transactions;
  • Component 3: Support improvement of the Fiscal Commitment and Contingent Liability (FCCL) framework associated with PPP Projects especially infrastructure; and
  • Component 4: Support program implementation.

The PPPU, under the authority of the Director, acts as the overall Implementing Agency for the IFPPP project. The project is implemented with the support of a Project Implementation Unit (PIU) reporting to the Director - PPPU.

The PIU is composed of five functions: (1) A Project Manager (covering also Outreach and Communication); (2) Financial Management Specialist, (3) Procurement Specialist; (4) Assistant Project Accountant; and (5) M&E Specialist.

A Project Steering Committee (PSC) for the Project, chaired by the Principal Secretary - National Treasury, has been established with its function developed in terms of roles and responsibilities in the Project Implementation Manual (PIM).

Click here for a copy of the IFPPP Procurement Plan.

 

One of the most crucial elements contributing to successful PPPs is the early identification of a strong pipeline of PPP projects.

To help in this effort, in November 2011, the Government, through the Financial and Legal Sector Technical Assistance Project (FLSTAP), engaged Ecorys Nederland BV and Gibb Africa Ltd to undertake a PPP pipeline study/analysis. To view the final report on the Pipeline Analysis, click here.

The main objective of the assignment was to identify and prioritize potential PPP projects, which have a high degree of success with minimal risks to the Government.

The analysis consequently developed a long list of potential projects including Vision 2030 flagship projects. After further analysis of this long-list of projects, the GoK reduced it to a “priority” list.

The below represents the “First Mover” projects of the highest priority for IFPPP support:

  1. Kisumu Port
  • Kisumu Port is located in Kisumu County, on the shores of Lake Victoria, the second largest freshwater lake in the world. The catchment of Lake Victoria, which encompasses parts of Kenya, Uganda, Rwanda and Burundi, has a population of around 35 million and a GDP of some USD 30 Billion i.e. 40% of the total EAC economy.
  • Approximately 0.5 million people live in Kisumu and 10 million in the Kisumu region, accounting for approximately 27 percent of Kenya’s population. As such Kisumu is the third largest city in Kenya and a commercial center with diverse unexploited resources in agriculture, commercial, industrial, tourism and transport services.
  • Kisumu Port, established in 1901, was a critical link in this integrated rail/water transportation system with particular focus on freight transport. Neither the Rift Valley Railways (RVR) nor its predecessors, the Kenyan and Ugandan railways, have made any infrastructure investments in the ports for more than two decades.
  • The port is operating at a mere 20% of its capacity with infrequent lake transport and the lack of container port facilities limiting the ability for businesses to use the lake. Additionally, the low water level by the port restricts the size of boat able to access the port.
  • The poor condition of roads outside of Kisumu – particularly the main artery connecting the city with Nairobi – is by far the largest infrastructure constraint impacting business activity in the region.
  • Kisumu Port is currently managed by Kenya Railways Corporation (KRC), though the assets and operations of the port (along with the other ports on Lake Victoria) are scheduled to be transferred to Kenya Ports Authority (KPA). The transition is expected to be implemented by the end of this year.
  • The Kisumu Port project is well embedded in the national and regional policy context and seeks to unleash the economic growth potential of the East African region.
  • The redevelopment of the Kisumu Port has the following objectives:
  1. Promote local and regional trade;
  2. Effectively manage the ports;
  3. Create employment;
  4. Support commercial, agricultural and industrial development;
  5. Support tourism activities;
  6. Facilitate movement of people and goods;
  7. Ensure the efficient utilization of the ports for the benefit of the East African Community region.
  1. Nairobi Southern Bypass
  • The Nairobi-Southern Bypass has been proposed under the Operation and Maintenance (O&M) PPP scheme.
  • China Road and Bridge Corporation (K), on the basis of their preliminary design, were contracted in November 2010 by the Government of Kenya, through the implementing agency, KeNHA, to carry out the design and construction of the Southern Bypass Road.
  • The works consist of the construction of dual carriageway with a length of 28.6 km, with 12 km slip roads and 8.5 km service roads in design and extra 8 km service roads whose location shall be decided by KeNHA. The Southern bypass was launched by H.E the President on 16th March 2012.
  • The proposed new dual carriageway is a Class A international trunk road, approximately 30 km long situated in the city of Nairobi and in Kikuyu Division of Kiambu District, Central Province.
  • The project road starts at the junction of Mombasa Road at Airtel Headquarters where an interchange will be constructed linking with the Kabete Limuru Road (A104) at Kikuyu town. The Project Commencement Date was 2nd July, 2012, Contract Period is 36 Months and estimated Completion Date 2nd July, 2015.
  • Accordingly, the Government of Kenya, under provisions of the PPP Act 2013, represented by Kenya National Highways Authority (KeNHA) as the Contracting Authority, is to award, through competitive bidding, a 20 years O&M Contract including life cycle costs as well as tolls collection on behalf of KeNHA.
  • The Project Company is to maintain and operate the Nairobi Southern Bypass with a total Length of 30 km, whereby the costs to the private sector will be paid by Government of Kenya through periodic availability payments including a fair and reasonable rate of return.
  1. 2nd Nyali Bridge

  • The Project is envisaged to apply a PPP arrangement for the development of a 2nd Nyali Bridge to connect the Mombasa Island with the North mainland to ease congestion on the existing Nyali Bridge.
  • The concept of two river crossings is expected to reduce congestion on the Nyali Bridge thus making the traffic less dependent on a single river crossing, reduce travel time, and enhance connectivity and reliability, which is becoming increasingly important for the residential and economic development of Mombasa.
  • For the time being, the 2nd Nyali Bridge is assumed that it will be a dual carriageway subject to a more detailed traffic analysis necessary to assess the design capacity. The project is to not only include the construction of the bridge though also the construction of the access roads to provide an adequate connection to the urban network.
  • Accordingly, the Government of Kenya, under provisions of the PPP Act 2013, represented by Kenya Urban Roads Authority (KURA) as the Contracting Authority, is to award the Project through competitive bidding a 25 years concession agreement to a Project Company for the design, build, finance, maintain and operate the Second Nyali Bridge.
  • A BOT model is recommended, implying that the cost of construction and operations are to be recouped by the private operator with toll revenues.