Bids invited for $1.1 billion Kampala-Jinja Expressway

May 28, 2018 in Infrastructure, Investment, Transport by Editor

May 24, 2018—Responses to an invitation of bids for the proposed 77 kilometre Kampala-Jinja Expressway will reflect the level of foreign investor confidence in Uganda’s economy as it moves to first oil in 2020, but is still beset by a creaky transport network.

Like the Kampala-Entebbe Expressway which is to be officially opened next month, the proposed new expressway to Jinja will be a toll-road. But while the thoroughway to Entebbe is being paid out of a nearly $500 million Chinese government loan through the China Eximbank, the highway to Jinja will rely partly on private funding.

The Uganda National Roads Authority (UNRA) has given July 23, 2018 as the deadline for receiving bids for the proposed $1.1 billion Public-Private Partnership (PPP) Greenfield project to revamp one of Uganda’s busiest sections of trunk road. Completed drawings for the project have been on the table for over five years now, but the problems associated with the Kampala-Jinja highway began to emerge during the late 1990s. AFD, the French international aid agency and the International Finance Corporation, part of the World Bank Group, have helped in the feasibility study and other preparatory documentation.

Present traffic congestion during peak hours along the stretch between Nakawa-Seeta and Mukono has been cited as some of the worst in East Africa and costly in terms of time and fuel consumption. Due to constant snarl-ups, a 15 km distance can often take two hours. There is an added importance to the expressway project since, the first exports of Uganda’s oil may have to be transported by road in heated storage tankers to Mombasa.

The project involves two separate lots of works. There is the main dual-carriageway to link Namugongo, on the outskirts of central Kampala to Jinja and development of a new southern by-pass.

Last year at the launch of the 10th Uganda Economic Update,  Rachel Kaggwa Sebudde, World Bank Senior Economist said,  “Public-private partnerships have the potential to offer many benefits for the government and the people, but their management requires strong structures and policy frameworks.”

Experts say PPP projects do not necessarily mean drastic cost savings compared to a fully financed public project, however private partners usually have immediate access to money, which may not be the case with public budget cycles.

Observers are particularly interested to see whether state-owned Chinese contractors will be as enthusiastic to tender for this PPP if their government is not fully funding the project through concessional loans which has been the norm. Currently, Chinese companies dominate Uganda’s roads contracts under these circumstances.

Growing African debt is causing the Chinese government to ease off on lending not directly connected to the multi-billion One Road One Belt project spread across Asia, the Middle East, eastern Europe and parts of the African coastline.

In early March, Geng Shuang, a Chinese foreign affairs ministry spokesperson said  they were encouraging and supporting its companies to increase direct investment in Africa and explore new cooperative modes of investment such as public-private partnership (PPP). He said in a statement, “I emphasize that the Chinese side attaches great importance to the sustainability of Africa’s debt.” In other words the Chinese are not looking to piling on more debt on any African government if they feel chances of getting it back are slim.

The Jinja highway is part of the Northern Corridor transport route that connects Mombasa in Kenya to Kigali with an offshoot to South Sudan. The UNRA wants to partner with the private sector to Design, Build, Finance, Operate for and Transfer over a 30 year timespan.