Strabag insists Kenyan road is viable
27 April 2011
Strabag has appealed to the Kenyan Ministry of Roads to continue with a toll road concession project in Nairobi that it accuses of terminating "without a reasonable cause".
In November 2007, the Kenyan government awarded the contract to construct and operate a 106 km section of the proposed toll road on a 30-year concessional basis to a consortium consisting of Austrian contractor Strabag and Housing & Construction Holding Company, a subsidiary of Israeli company Israeli Arison Holdings. The project has a total value of around KES 67 billion (US$ 825 million).
Strabag, which has repeatedly stressed its commitment to pursuing the project, said it had adhered to the World Bank's requirements. But the contractor said it had received a letter on 12 April from the Kenyan Ministry of Roads cancelling the project, citing the lack of financial support from the World Bank.
"By means of three sentences, the Ministry cancels - without a reasonable cause - a process in which Strabag invested more than five years of time and which has already incurred substantial development costs," the contractor said, adding that it could provide written confirmations from the World Bank, the European Investment Bank and other international and local financing institutions supporting the project.
Wolfgang Sommerbauer, director of international projects at Strabag, said, "We remain committed to the project and assure the financial close within twelve months after signing the concession agreement. As a result, we could start construction early 2012. All parties are ready to start, but for some irreproducible reason the Ministry of Roads delays the process. We are very disappointed by the Ministry's course of action which costs so much time and money for the Kenyan people."
