Uganda, AfDB in $229m Kampala-Jinja highway deal
Wednesday March 31 2021
Uganda and the African Development Bank last week signed a $229.5 million financing agreement for phase one of the Kampala-Jinja Expressway, a project expected to cut travel time between the two cities and boost trade along the northern corridor which links the country with its neighbours.
The money will finance expressway civil works whose contractor procurement is currently ongoing, for the 95km project whose total cost is $1.48 billion, to be executed under a Public Private Partnership (PPP) arrangement, Uganda National Roads Authority (UNRA) says.
A private concessionaire will be procured, for period of 30 years, including an eight-year construction period on a design-build-finance-operate-transfer basis under the Availability Payment PPP model, the UNRA said.
Finance Minister Matia Kasaija, who signed on behalf of the Uganda government, said the expressway will improve traffic flow and reduce travel time from more than three hours to under one hour between Jinja and Kampala — the country’s two main economic hubs.
The project comprises the Kampala-Jinja mainline expressway and the Kampala Southern Urban Bypass (KSB), with financing from AfDB to be used for works on the 18km KSB and the 35km stretch of the main expressway from Kampala to Namagunga, east of the city.
Thereafter, section two of the expressway is a rural motorway covering 42km from Namagunga to Jinja, whose financing and implementation of works hinges on when the French Development Agency (AFD) approves and disburses €90 million ($105 million).
In March last year, junior minister for finance David Bahati tabled before Parliament two proposals seeking its authorisation to borrow $229.47 million from AfDB and €90 million ($107 million) from AFD to finance construction of Kampala-Jinja expressway.
Both loans have a grace period of eight years and maturity period of 25 years, Mr Bahati’s proposals to Parliament indicated.
But the proposals were meant to formalise the borrowing as the AfDB board had in October 2018 already approved the $229.47 million loan for the Kampala-Jinja expressway project, to be co-financed with the AFD, in support of Uganda’s Vision 2040, which prioritises road infrastructure development.
Financing is expected to pave the way for the private concessionaire to provide the remaining $800 million.
“The Public-Private Partnership model will bring in private sector participation and financing of a key infrastructure in Uganda and will yield a significant economic return for the country with an estimated net revenue of $2.1 billion over the 30-year concession period,” said AfDB Country Manager for Uganda Augustine Kpehe Ngafuan.
The financing agreement stipulates that at least 30 per cent of subcontracting in the project will be awarded to local companies, create at least 1,500 direct jobs during the construction phase and 250 jobs during the operational phase, Mr Ngafuan said.
, adding that as critical for the economic development of Uganda, designed to a standard in line with the government objectives and consistent with the country’s expressway network.
The expressway, whose preparation started in 2010 with a feasibility study, and in in 2014, the International Finance Corporation was appointed transaction advisor for the PPP feasibility studies and preparation of the bidding process.
When completed, it will form a network that will enable quick mobility of vehicles within and around Kampala and surrounding areas.