Road Annuity Project in Kenya (Lot 32)
This summary covers equity investment from Sinohydro Corporation Ltd and debt financing by Standard Bank of South Africa Ltd and Stanbic Bank Kenya Ltd to the Skar Lot 32 Development Corporation Limited for the road annuity project in Kenya (Lot 32) (the “Project”). Sinohydro Corporation Ltd and Standard Bank of South Africa Ltd have applied for MIGA guarantees to cover their equity investment and non-shareholder loans and interest totaling US$58 million for a guarantee period of ten years against the risks of Transfer Restriction, Expropriation, Breach of Contract, and War and Civil Disturbance.
The Project involves the construction, rehabilitation, upgrading, operation, and maintenance of an existing 66.5km rural road also known as the Lot 32 Illasit-Njukini-Taveta Road in Kenya. The total investment for the Project is estimated at US$76.7 million, including US$11.7 million in equity from Sinohydro Corporation Ltd, US$35.2 million in debt financing from Standard Bank of South Africa Ltd and Stanbic Bank Kenya Ltd, and US$29.8 million from the Government of Kenya (“GoK”). The project is expected to start construction by the end of 2020.
By investing in the rehabilitation and upgrade of the rural road, the Project is expected to bring important economic and social benefits for local communities. Upon completion, the Project is expected to improve road safety, generate time travel savings and reduce vehicle operating costs. At the same time, the upgraded road will improve access to key social infrastructure such as schools, healthcare facilities and business centers. The economic impact of the Project will be amplified by the creation of new employment opportunities, directly and indirectly at vendors, during construction and maintenance of the road. The Project may also contribute to increased economic dynamism in the influence area of the road, in particular in agriculture.
The Project is consistent with the GoK’s 2nd Medium Term Plan, which operationalized Kenya’s Vision 2030 goals and promotes safe and efficient transport network. The Project supports World Bank Group (“WBG”)’s twin goals of eliminating extreme poverty and boosting shared prosperity, as well as WBG’s Maximizing Finance for Development Approach. The Project is also aligned with MIGA’s FY21-23 Strategy by supporting an investment in an IDA-eligible country.