World Bank withdraws support for Kenya road

By Helen Wright03 February 2011

The World Bank has withdrawn its financing of the Nairobi Toll Road (NTR) project in Kenya unless the consortium that won the concession improves its compliance and training procedures.

In November 2007, the Kenyan government awarded the contract to design, construct, finance, and operate a 106 km section of the proposed NTR 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).

A spokesman from the World Bank said it was withdrawing a US$ 200 million partial risk guarantee for the project on top of earlier, unspecified investment pledges including a technical assistance facility.

The World Bank said it made the decision not to participate after completing due diligence on the project and its sponsors.

"The World Bank found that the systems and approach to compliance procedures would not be commensurate with the circumstances of this project and the governance risks facing this sector," the institution said.

It added that it is now up to the Kenyan government to determine whether it wishes to proceed with the NTR project without World Bank financing or pursue other options.

However, the bank said it would be prepared to finance a concession undertaken by Strabag, on the condition that the contractor agrees to increased compliance procedures.

Strabag and Arison Holdings did not respond to requests for comment on this condition.

Meanwhile, the World Bank said it remains committed to partnering with the government of Kenya to improve the country's road network and urban infrastructure, adding that it has provided over US$ 460 million in financing and private sector investment guarantees to Kenya's road sector in the last five years.

Indeed, further support of US$ 300 million for Kenya's road sector is envisaged over the next three years, the World Bank said.

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