Kenyan taxpayers could be liable for up to Sh180.73 billion if the government ever terminated the 30-year contract for the Rironi-Mau Summit highway, according to estimates in the National Treasury's draft 2027 Budget Policy Statement (BPS).

The figure, reported by Business Daily on Monday, is the largest single item in a Sh413.81 billion maximum exposure the Treasury has calculated for terminating existing and advanced public-private partnership (PPP) projects in the financial year starting July 2027. The highway alone accounts for nearly 44 per cent of that total.

The Treasury stresses that these are worst-case figures rather than an expected bill. "The likelihood, value and timing of termination payments cannot be determined with certainty in advance," the document says, adding that "it is unlikely that all projects would be terminated at the same time."

How the sum breaks down

The highway is being built in two packages. The Rironi-Naivasha-Gilgil and Rironi-Mai Mahiu-Naivasha sections are being delivered by China Road and Bridge Corporation (CRBC) together with the National Social Security Fund (NSSF), at a combined value of Sh96.38 billion to be recovered over 30 years. Ending that contract could trigger payments of up to Sh93.38 billion, the Treasury estimates.

The Gilgil-Nakuru-Mau Summit section, awarded to Shandong Road and Bridge International at a cost of Sh86.35 billion, carries a potential termination cost of Sh87.35 billion. Construction on that stretch is under way, but financial close was still pending when the report was compiled, according to Business Daily.

Investors in both packages are to recover their money mainly through tolls over the concession period.

A costly precedent

The disclosure carries extra weight because Kenya has already paid to walk away from a deal on the same corridor. The earlier contract with a French consortium led by Vinci Highways, signed in Paris in 2020 during a visit by then-President Uhuru Kenyatta, was cancelled by the current administration before construction began.

The government had sought to renegotiate, arguing that traffic might not be enough to cover costs and that taxpayers could end up carrying the risk. When the talks failed, Kenya paid the consortium Sh7.3 billion in 2025 to settle the dispute and avoid arbitration in London, Business Daily reported, and turned to Chinese contractors after President William Ruto's visit to Beijing in April 2025.

President Ruto has since set an April 2027 deadline for the first phase of the road between Rironi and Mau Summit, Capital FM has reported, with plans to extend the dual carriageway towards Malaba on the Uganda border.

Other projects on the list

The BPS also sets out exposure on other PPPs. Terminating the 27.1-kilometre Nairobi Expressway, operated by Moja Expressway since May 2022, could cost up to Sh72.04 billion next financial year, down from Sh103.76 billion in the year to June 2025 as the concession matures.

The smart driving licence project run by Pesa Print Ltd and funded by KCB Bank, signed on June 30 this year for 21 years, carries a potential exposure of Sh50.22 billion against a project value of Sh45 billion. The Africa50-PowerGrid electricity transmission lines carry exposure of Sh41.05 billion, rising to Sh43.94 billion the following year.

Why it matters

Termination liabilities are a form of contingent debt: they do not appear in the official public debt figures, but the State would have to pay them if a deal collapsed through government action, policy change or a dispute.

The BPS is the Treasury's main budget framework, and lawmakers will scrutinise it before it is tabled in Parliament next year. Its disclosure comes as Kenya leans increasingly on PPPs and other off-balance-sheet arrangements to finance roads, energy and housing while trying to keep conventional borrowing in check.

Photos: Business Daily; Bahnfrend / Wikimedia Commons (CC BY-SA 4.0)