Weakening shilling drives up Nairobi Expressway toll fee ahead of launch
Tuesday April 26 2022
Motorists will pay up to Ksh350 ($2.68) more to use the Nairobi Expressway after the government reviewed the toll charges to match the strengthening of the dollar in the past one year.
Motorists using the road that links Mlolongo to the Nairobi-Nakuru highway via Jomo Kenyatta International Airport (JKIA) will pay between Ksh120 ($1.04) and Ksh1,800 ($15.55), up from the previous rates of between Ksh100 ($0.86) and Ksh1,550 ($13.39).
The government increased the charges to cushion the Chinese investor funding the road against exchange losses in the wake of the shilling weakening to record lows against the dollar.
The new rates are based on the dollar trading as at last December which was Ksh113.14 ($0.98) up from Ksh103.79 ($0.90) in a similar period in 2020.
“The Base Toll Rates may be adjusted as per the Consumer Price Index and Exchange Rate on and after the commercial operation date. The Exchange rate of USD to Ksh on the 31st December 2021 rose to Ksh113.14,” reads the notice published by Transport Secretary James Macharia.
The review of the toll charges is meant to cushion Moja Expressway - the Chinese firm operating the road - from exchange rate also depending on the size of the cars and distance travelled.
The shilling plunged to record lows against the dollar last year following reopening of the economy when the Covid-induced night curfew was lifted, with businesses reporting rising demand for goods that have translated to higher dollar demand from importers.
Those holding dollars also became reluctant to loosen their positions out of concern about further depreciation, constraining the greenback supply that would ease pressure on the local currency.
A weaker shilling leads to increased costs of all payments denominated in dollars due to the need for more units of the local currency to exchange for the hard currencies which are used in the international markets.
High-capacity vehicles like transit lorries will pay between Ksh600 ($5.18) and Ksh1,800 ($15.55) to use the expressway depending on distance travelled on the road, while low-capacity vehicles like saloon cars will pay between Ksh120 ($1.04) and Ksh360 ($3.11).
Motorbikes and three-wheelers commonly known as Tuk Tuks will not be allowed to use the double-decker road that is nearing completion ahead of schedule.
The road was launched in October 2020 as part of the government’s ambitious plans to reduce heavy traffic on Mombasa Road which usually starts from Mlolongo to the city centre.
Nairobi Expressway is privately-funded and Moja Expressway— a subsidiary of China Road and Bridge Construction (CRBC) will operate it for 27 years to recover its money before ceding the road to the State.
Roads Maintenance Levy
The firm will be at liberty to review the base toll rates annually based on the inflation rate with the fees projected to earn the company Ksh302.5 billion ($2.6 million) in revenues every year.
The review of the toll charges comes barely a month after Parliament approved proposed regulations meant to establish a fund where monies from toll highways will be kept.
The Public Finance Management (National Road Toll Fund) Regulations 2021 will establish the National Roads Toll Fund, seeking to implement the Public Roads Toll Act, Cap 407, which guides the imposition of toll fees on major national roads.
Other roads where motorists will pay toll charges include Nairobi-Nakuru, Nairobi-Mombasa, Nairobi-Thika and Nairobi’s Southern Bypass. City roads like Jogoo, Lang’ata and Ngong could be targeted.
Kenya introduced tolling roads in the late 1980s but scrapped them in the mid-1990s in favour of the Roads Maintenance Levy to eliminate corruption at toll stations. The levy is currently charged at Ksh18 ($0.16) per litre for petrol and diesel.
Road tolling was conceptualised in the developed world as a form of taxation through which governments could recoup the cost of road construction and maintenance given the huge rise in the number of vehicles.
The system allows a private entity that has built a road to charge a fee to recoup its investment before eventually handing over the highway to the State.