RFQ issued in July
Transport and Infrastructure
Kenya Rural Roads Authority (KeRRA)
The Government of the Republic of Kenya through the Ministry of Transport and Infrastructure represented by the Kenya National Highways Authority (KeNHA), Kenya Rural Roads Authority (KeRRA), and the Kenya Urban Roads Authority (KURA) being state corporations established under the Kenya Roads Act, 2007 has identified the need to upgrade to paved standards approximately 2,000km of roads. These roads are intended to support the primary growth sectors of Commerce, Tourism, Agriculture and Rural Production, and Extractive Industries. Lot 33 comprises of a total of 91 KMs comprising of the following roads; • Kajiado – Imaroro • Ngong – Kiserian – Isinya
The scope of work will broadly include upgrading to paved standards of gravel and earth roads and rehabilitation/reconstruction of existing roads including bridges, culverts, road intersections, drains, etc. and the maintenance thereof.
The project was selected for development as a PPP because it proved that it would generate value for money to the government if done as a PPP rather than using traditional methods of procurement. Value for Money is determined as the difference between the costs to the government for doing the project as a PPP, and the cost of using traditional procurement methods. Projects that generate a positive value for money are considered the best projects to be undertaken as PPPs, since there is optimal risk allocation, that allocates risk to the party best suited to manage it. Other than the provision of value for money, the involvement of a private party results in improved service delivery and efficiency in implementation of the project.
PwC Nairobi in association with HH&M Advocates (KeNHA, KURA and KeRRA undertook the technical and social environmental aspects of the feasibility study). The Transaction advisor was engaged, in its capacity as a Financial Advisory firm, for the development of the project to structure and ensure that it is bankable and ensures value for money to the Contracting Authority. The TA takes charge in the completion of the initial project appraisal including: Preparation of a Feasibility study report; Carrying out a procurement and PPP options analysis and recommending the best PPP mode of delivery; Assist the client in leading the development of a procurement strategy and timetable for the project, identifying key milestones, deliverables and approval stages; and Conduct a comprehensive Economic and Financial analysis for the project including developing a detailed and comprehensive Project Financial Model. Additional services include: Preparation of bidding documents (including the EoI, RfQ and RfP documents); and Provision of support during the bidding process, including tender evaluation and bidder negotiations until Financial closure.
Project summary documents are attached . Kindly click on the 'Download all page documents' tab above
Invitation to prequalify for the development of 2,000 kilometers of roads supporting primary growth sectors through contractor facilitated annuity-financing mechanism.
This is the document that provides the shortlisted parties with the necessary information, for them to submit technical and financial bid.
RFQ issued in July
RFP issued in October
Commercial close attained.
Financial close attained.
The debt equity ratio is 90:10. KCB Kenya Limited is the senior lender.
|Type of risk||Description||Allocation||Mitigation|
|Technology risk||The possibility that the technical inputs for the outsourced contracting authority function may fail to deliver the required output specifications.||Public and Private Sectors||Private party obligated to refresh technology from time to time. Penalty Deductions for failure to meet output specifications.|
|Latent defect risk||The possibility of loss or damage arising from latent defects in the Facilities included in the Project Assets.||Public and Private Sectors||Design to be done by concessionaire. If, however, the Project involves the take- over by the Concessionaire of they must undertake thorough due diligence on the same. Reporting obligation on Concessionaire to promptly disclose discovered defects.|
|Completion risks||The possibility that the design, procurement, construction and commissioning of the Facilities required for the Project may be (i) delayed so that the delivery of the Services included in the Project cannot commence at the envisaged start-up date, or (ii) delayed, unless greater expenditure is incurred to keep the Project to the envisaged start-up date, or (iii) delayed because of variations||Private Sector||Special insurance (delay in start-up insurance). Liquidated damages, construction bonds and other appropriate security from the Concessionaire to achieve completion, unless caused by the Contracting authority. Relief Event.|
|Design risk||The possibility that the Private Party’s design may not achieve the required output specifications.||Public and Private Sectors||Clear output specifications. Design warranty. Patent and latent defect liability. Consultation with and review by Contracting authority (but review must not lead to input specifications by Contracting authority). Independent Engineer appointment to resolve disputes on expedited basis.|
|Cost over-run risk||Possibility that during the design and construction phase, the actual Project costs will exceed Projected Project costs.||Public and Private Sectors||Fixed price construction contracts. Contingency provisions. Standby debt facilities / additional equity commitments (Shareholder and other funder commitments); provided that these commitments are made upfront and therefore anticipated in the base case Financial Model.|
|Planning risk||The possibility that the implementation of the Project fails to comply with applicable planning law or any planning approval, or that a detailed planning approval cannot be obtained or, if obtained, can only be implemented at greater cost than Projected.||Public and Private Sectors||The Contracting authority must identify at the feasibility phase any planning approvals that can be obtained by the Contracting authority before the detailed designs for the Project are finalized (e.g. any re- zoning and land-use consents). These approvals must then be obtained before the Project is put to tender. The Concessionaire must identify before the Signature Date all planning approvals that are required for the Project having regard to the specific design inputs proposed by the Concessionaire. The Concessionaire must make adequate provision in its construction Works programme for such approvals.|
|Environmental risk||This includes not only the possibility of liability for losses caused by environmental damage (i) arising from construction or operating activities (see operating risk) during the Project Term, but also (ii) arising from pre-Project Term activities whether undertaken by the Contracting authority or a third party and not attributable to the activities of the Concessionaire or its subcontractors.||Private Sector||Thorough due diligence on pre-existing environmental conditions. Indemnity for pre-existing environmental conditions, limited by a cap (subject to VFM considerations). Remediation works to remedy pre-existing environmental damage as a specific Project deliverable. Independent monitoring of remediation works. Special Insurance.|
|Availability risk||The possibility that the Services to be provided by the Concessionaire are less than required to meet the output specifications of the Contracting authority.||Private Sector||Clear output specifications. Performance monitoring. Penalty regime.|
|Supply, input or resource risk||The possibility of a failure in the supply of the inputs (particularly, resources such as natural gas or coal) required for the operation of the Project including non- supply or deficiencies in the quantity and quality of available supplies.||Private Sector||Supply contracts for supply of total Project requirements, such as take and pay contracts.|
|Utilities supply risk||The possibility that the utilities (e.g. electricity, gas and water) required for the construction and/or operation of the Project may not be available.||Public and Private Sectors||Emergency back-up facilities, e.g. generators. Emergency supply contracts. Special insurance.|
|Insolvency and outside creditor risk||The possibility of the insolvency of the Concessionaire or any of its Shareholders.||Public and Private Sectors||SPV structure to ring-fence Project. Security over necessary Project Assets. Limitations on debts and other funding commitments of the Concessionaire including any outside the Project. Reporting obligations in respect of any litigation; financial information; disputes with creditors. Substitution of Concessionaire in terms of Direct Agreement|
|Sub-contractor risk||The risk of subcontractor defaults or insolvency. This risk may arise at the construction and/or operations phases of the Project.||Public and Private Sectors||Subcontractors must have expertise, experience and contractual responsibility for their performance obligations. Substitution of subcontractors. Due diligence by the Contracting authority must include review of first tier subcontracts to confirm that pass through of risks down to the first tier subcontractors|
|Operating risk (technology, environmental, cost and management)||Any factors impacting on the operating requirements of the Project (including projected operating expenditure and skills requirements, e.g. labour disputes, employee competence, employee fraud, technology failure, environmental incidents and any failure to obtain, maintain and comply with necessary operating permits).||Public and Private Sectors||Clear output specifications. Penalty regime and performance monitoring. Adequate O&M contract. Substitution rights. Security and special insurance.|
|Maintenance risk||The possibility that (i) the cost of maintaining assets in required condition may vary from the Projected maintenance costs, or (ii) the agreed maintenance programme is not followed.||Public and Private Sectors||Clear output specifications. Penalty regime and performance monitoring. Adequate O&M contract. Substitution rights. Security and special insurance.|
|Force Majeure (act of God) risks||This may overlap with operating risk or completion risk, and includes certain unexpected factors out of the control of the Project participants (whether natural or “man-made”), which may affect the construction or operation of the Project.||Public and Private Sectors||Define “Force Majeure” narrowly to exclude risks that can be insured against or are dealt with more adequately by other mechanisms such as Relief Events or Compensation Events. Relief and Compensation Events. Termination.|
|Changes in Law||The possibility of action by any government authority that materially and adversely affects the completion and/or operation of a Project, or the expected return on investment of the Concessionaire’s funders. This risk overlaps with some financial risks (e.g. tax rate change risk) and other risks such as operating risk.||Public and Private Sectors||Limit risk to Changes in Law and to expropriation, nationalisation or privatisation (collectively, “expropriating actions”) of the Contracting authority, services or assets of the Concessionaire. Distinguish between General and Discriminatory Changes in Law. In relation to Discriminatory Changes in Law, termination by Concessionaire with compensation.|
|Regulatory risk||The possibility that the approvals required from government authorities for the Project will not be obtained (other than planning and environmental approvals, which elsewhere herein, are specifically dealt with, see planning risk and environmental risk).||Public and Private Sectors||Legal scan undertaken to be by the Contracting authority at the feasibility phase of the Project to identify all such approvals. Implementation by the Contracting authority of an inter- governmental liaison process with the responsible government authorities before the procurement phase. Due Diligence by Concessionaire to identify approvals its requires for its operating requirements If permitted under applicable law, obtain all such approvals before the Signature Date.|
|Currency or Exchange rate risk||The possibility that exchange rate fluctuations will impact on the envisaged costs of imported inputs required for the construction or operations phase of the Project.||Public and Private Sectors||Hedging instruments (e.g. swaps).|
|Interest rate risk||These are factors affecting the availability and cost of funds.||Public and Private Sectors||Hedging instruments. Fixed ate loans|
|Tax rate change risk||The possibility that changes in applicable tax rates (income tax rate, VAT) or new taxes may decrease the Project party’s anticipated return.||Public and Private Sectors||Termination by Concessionaire with compensation for tax increases or new taxes arising from Discriminatory Changes in Law.|
|Inflation risk||The possibility that the actual inflation rate will exceed the Projected inflation rate. This risk is more apparent during the operations phase of the Project.||Public and Private Sectors||Index linked adjustment to Unitary Payments(specific input items) or user charges.|
|Insurance risk||The possibility (i) that any insurable risks may become uninsurable in the course of the Project Term or (ii) of substantial increases in the rates at which insurance premium are calculated.||Public and Private Sectors||At the option of the Contracting authority, self-insurance by the Contracting authority or, if the uninsurable event occurs, then termination of the Agreement with compensation to the Concessionaire.|
|Residual value risk||The risk that the Project Assets at termination or expiry of the Agreement will not be in the prescribed condition for hand back to the Contracting authority.||Public and Private Sectors||Obligations on Concessionaire to maintain and repair. Audit towards the end of Project Term. Security by the Concessionaire in favor of the Contracting authority, e.g. Final condition bond, or deduction from Unitary Payment. Reinstatement obligations on Concessionaire.|
The government is to make a capital contribution at the start of the project. This capital contribution would go toward the construction of the road and is to be determined as a percentage of the EPC cost.
|Letter of Support||
A Letter of Support has been issued by the National Treasury
The service provider will receive payments from the contracting authority in form of quarterly annuity payments. These payments are to be made from the Roads Annuity Fund. The Roads Annuity Fund is financed through the ksh.3 in the fuel levy.
|Events of Default||Brief description||Termination Payments||Documents|
|Failure to Meet project Milestones||The Service Provider does not achieve the latest outstanding Project Milestone due in accordance with the provisions of the schedules to the project agreement and continues to be in default for 120 (one hundred and twenty) days||Debt Due|
|Abandonment of the project network||The Service Provider abandons or manifests intention to abandon the construction or operation of the Project Network for a continuous period of time that exceeds one (1) month without the prior written consent of the Contracting Authority||Debt Due|
|Failure to complete construction within the timelines outlined in the project agreement||The Project Completion Date does not occur by the Longstop Date or where pursuant to the provisions of the PA the Contracting Authority is entitled to call a Service Provider Default||Debt Due|
|Failure to make payments due or owing to the Contracting Authority||The Service Provider has failed to make any payment due and owing in excess of 25% of the yearly amount of the Annuity Payment to the contracting authority within the period specified in the project agreement and such amount (if undisputed) remains unpaid for 30 days from the date of non-payment.||Debt Due|
|Failure to meet payment obligations due to the lender||Upon occurrence of a Financial Default, the Lenders’ the lender may by notice require the Contracting Authority to undertake Suspension or Termination, as the case may be, in accordance with the Direct Agreement and the Service Provider fails to cure the default within the Cure Period specified.||Debt Due|
|Breach of the sub-contracts||A breach of any of the Principal Sub-Contracts by the Service Provider or any Contractor which causes a Material Adverse Effect which is not cured within a Cure Period of 30 (thirty) days.||Debt Due|
|Creation of Encumbrances||The Service Provider creates any Encumbrance in breach of the Project Agreement.||Debt Due|
|Repudiation of the Project Agreement||The Service Provider repudiates this Agreement or otherwise takes any action or evidences or conveys an intention not to be bound by the Agreement;||Debt Due|
|Change in ownership of the SPV without following due process||A Change in Ownership has occurred in breach of the provisions of the Project Agreement;||Debt Due|
|Bankruptcy/Insolvency of Service Provider||The Service Provider is adjudged bankrupt or insolvent, or if a trustee or receiver is appointed for the Service Provider or for the whole or material part of its assets that has a material bearing on the Project.||Debt Due|
|Liquidation, winding up or amalgamation of the SP||The Service Provider has been, or is in the process of being liquidated, dissolved, wound-up, amalgamated or reconstituted in a manner that would result in the reasonable opinion of the Contracting Authority, a Material Adverse Effect.||Debt Due|
|False representations and warranties by the SP||Any representation or warranty made or deemed to be repeated in the Project Agreement is false, incorrect in any material respect or misleading when made or deemed to be repeated to be in breach thereof which is not remedied within a Cure Period of 30 (thirty) days;||Debt Due|
|Failure to fulfill contracted obligations||The Service Provider has failed to fulfill any obligation, for which failure Termination has been specified in the Project Agreement or of the Service Provider (i) commits a material breach of its obligations under the Project Agreement not provided for under the Payment Mechanism and such breach causes a Material Adverse Effect on the Contracting Authority||Debt Due|
|Termination as per the provisions agreed||The Service Provider is in breach of the refinancing clause of the Project Agreement or (ii) where the Contracting Authority elects to terminate this Agreement pursuant to its rights under the termination clause of the Project Agreement||Debt Due|
|Failure to conform with performance standards||The Service Provider fails to meet the standards specified in the Service Performance Requirements resulting in Unavailability Deductions and Deemed Unavailability Deductions that add up to or more of the Annuity Payment due for that Annuity Payment Period.||Debt Due|
|Events of Default||Brief description of events of default||Termination Payments||Documents|
|Material Default by CA||The Contracting Authority commits a material default in complying with any of the provisions of this Agreement (other than as specified in (b) below) and such default has a Material Adverse Effect on the Service Provider.||i. Debt Due; ii. NPV; iii. Sub-Contractor Costs|
|Failure to Meet payment Obligations||The Contracting Authority has failed to make any payment due to the Service Provider under this Agreement (which are undisputed) which singly, or in aggregate, exceed 70% of the annual Annuity Payment and such failure continues for [90 (ninety)] days after notice of non-payment||i. Debt Due; ii. NPV; iii. Sub-Contractor Costs|
|Deed of Addendum||
A deed of addendum to the executed project agreement was signed on 13th February 2018 and the redacted version of the document will be published as soon as it is available
|Please find KPI document in the 'Download page documents' tab (Above)||Kindly click on the 'Download page documents' tab above||Kindly click on the 'Download all page documents' tab above|
Information will be published as soon as it is available.