Kenya, a country in east Africa has approved 40 projects for possible PPP arrangements. A majority of the projects are transport infrastructure including roads. In 2006 we carried an pioneering research on the feasibility of road tolling in east Africa's urban areas. The findings of the study were presented in a validation workshop inn Nairobi. Here is the presentation
1. Kenya National Chamber of
Commerce and Industry
WORKSHOP ON
Feasibility study on use of Private Finance in
Urban Road Infrastructure Development in
Eastern Africa
Held on November 22, 2006, at The Stanley Hotel Nairobi
Institute of
1
Infrastructure
Development
Consultancy. Research. Education.Advocacy
Moscom Limited
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
2. The Study
Session 3
By
Musyoka Fred kyendo
Lead Consultant
Institute of
2
Moscom Limited
Infrastructure
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
3. Scope of the Study
•
The study covered three East African Cities i.e. Nairobi, Dar es
Salaam and Kampala
•
It covered three roads, one in each city
Institute of
Infrastructure
3
Development
Consultancy. Research. Education.Advocacy
Moscom Limited
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
4. Scope of the Study
•
These are; Jogoo Road in Nairobi; Gayaaza Road in Kampala
and Old Bagamoyo Road in Dar es Salaam
Institute of
Infrastructure
4
Development
Consultancy. Research. Education.Advocacy
Moscom Limited
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
5. Methodology – Traffic Count
•
A 12 – hour traffic count was conducted in each city
•
In Nairobi, the study counted traffic on Jogoo Road
Institute of
5
Infrastructure
Development
Consultancy. Research. Education.Advocacy
Moscom Limited
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
6. Methodology – Traffic Count
•
In Kampala, we counted traffic on Gayaaza Road
•
In Dar es Salaam, we conducted on Old Bagamoyo Road
•
These are typical Urban Roads
Institute of
Moscom Limited
Infrastructure
6
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
7. Methodology – Choice of Road
•
•
•
•
Roads deliberately chosen to test Business model’s universal
applicability.
Jogoo Road is densely populated with vehicles
Gayaaza Road is moderately populated
Old Bagamoyo Road is sparsely populated
Institute of
Moscom Limited
Infrastructure
7
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
8. Traffic Count - findings
z
Jogoo Road - 50,840 Vehicles
z
Gayaaza Road - 13,558 Vehicles
z
Bagamoyo Road - 8,953 Vehicles
Institute of
Moscom Limited
Infrastructure
8
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
9. Traffic Count – Modal Split
Qty in 000s
Modal Split on Studied roads
30,000
25,000
20,000
15,000
10,000
5,000
0
Models
Institute of
Moscom Limited
Infrastructure
9
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
10. Traffic - Survey
•
An open ended questionnaire was administered on 1,000
Motorists in Nairobi and 300 each in Kampala and Dar Es
Salaam
Institute of
Moscom Limited
Infrastructure
10
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
11. Traffic - Survey
•
1,600 motorists interviewed
•
Some 1440 (90%) motorists respond accurately
Institute of
Moscom Limited
Infrastructure
11
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
12. Findings
•
PSV’s form the dorminant mode of transport on both
Jogoo and Gayaaza Roads
•
SUVs are the dominant mode on Old Bagamoyo Road
Institute of
Moscom Limited
Infrastructure
12
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
13. The Findings – Cont’d
•
To make a profit, PSV’s must make six-round trips a day
Institute of
Moscom Limited
Infrastructure
13
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
14. The Findings – Cont’d
•
All Roads studied are overdue for reconstruction and
expansion
•
Urban tolling methods are completely different from trunk
road methods
Institute of
Moscom Limited
Infrastructure
14
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
15. The Findings – Cont’d
•
Automated tolling systems are viable in urban roads
•
Average toll-rates in urban roads are way lower than in
trunk roads
Institute of
Moscom Limited
Infrastructure
15
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
16. The Findings – Cont’d
•
67 per cent of motorist interviewed ready to pay for good
roads
•
They are ready to pay directly to a contractor
Institute of
Moscom Limited
Infrastructure
16
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
17. The Findings – Cont’d
•
•
Jogoo Road is viable @ US$0.27 per day
Gayaaza and Old Bagamoyo are profitable @ US$0.81 per
day
Traffic density determines the toll rate: The higher the ADT
the lower the toll rate and vice versa
Institute of
Moscom Limited
Infrastructure
17
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
18. Costs – Time Lost in jams
•
A significant 50% per cent of the sample spent two hours a
day in traffic jams
•
Another 44% complained of spending one hour a day held
in traffic jam
•
A whole 94% of the sample spent between an hour and two
hours in traffic
Institute of
Moscom Limited
Infrastructure
18
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
19. Costs – Waste Fuel
•
A majority 38.1% waste 3litres of fuel a day in traffic jams
•
34% of respondents waste two litres a day
•
Another 27% waste four litres a day
Institute of
Moscom Limited
Infrastructure
19
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
20. Cost – Benefit Analysis
•
In effect 99 per cent of respondents “waste” 2 litres of fuel a
day
•
All roads in this study are overdue for
reconstruction/expansion
•
This is the study of the traffic jams some that last for up to
2hours or more
Institute of
Moscom Limited
Infrastructure
20
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
21. Costs – fuel “wasted”
•
Kenyan motorists lose Kshs 194.14 ($2.7) per day per
capita on “ fuel wastage”
•
Ugandan motorist “burn” UGshs 6860 ($3.71) per head per
day
•
Tanzania motorist “burn” TZShs 3,848 ($3.12) per head per
day
Institute of
Moscom Limited
Infrastructure
21
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
22. Costs – Man Hours Lost
KRB valued Man-hours lost as follows:
•
•
•
•
•
Senior Manager
Managers
Supervisors
Skilled Workers
Unskilled Workers
Institute of
-
$14.00 per hour
$7.00 per hour
$4.10 per hours
$1.40 per hour
$0.82 per hour
Moscom Limited
Infrastructure
22
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
23. National Productivity Loss
Kenya losses $271 million a year to traffic jams on
Jogoo Road
•
•
Ugandan losses $73 million a year
•
Tanzania losses $49 million a year
Institute of
Moscom Limited
Infrastructure
Development
23
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
24. To Build or not to Build
•
Smooth wide roads save the country on fuel import bill as
follows:
•
Kenya $29 million; Uganda $13.1 million; Tanzania $7.3
million a year
•
Add to these the productivity loss just demonstrated
Institute of
Moscom Limited
Infrastructure
24
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
25. Ready to Pay
•
•
•
•
•
•
Some 950 respondent i.e. 67% of the sample were ready to
pay
Of these, PSVs form 45 per cent
private cars/taxis 34%
SUVs & Pick-ups 12%
Others 19%
All ready to pay directly to contractor
Institute of
Moscom Limited
Infrastructure
25
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
26. Can Investors make Money
•
•
•
•
•
•
Yes,
Assumption;
Only 67% of Motorist will pay
Toll rates will be $0.27 in Kenya and $0.81 in Uganda and
Tanzania
The concession will last 25 years
Historical MV growth rates will be maintained in the next 25
years
Institute of
Moscom Limited
Infrastructure
26
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
27. MV Growth Rates
•
Kenya Historical growth rate is 4.8% per annum
•
Tanzania 5.5% per annum
•
Uganda 4.5% per annum
Institute of
Moscom Limited
Infrastructure
27
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
28. Toll Collection
•
Will be collected by Non-stop, fully automated system
•
Transactions enabled by a 5.8 GHz microwave link between
the Road –Side-Unit and the In-Vehicle-Unit on the
windscreens
Institute of
Moscom Limited
Infrastructure
28
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
29. Toll Collection
•
Provides subsystems for electronic transactions at the
lanes, data collection, supervision, monitoring, violation,
processing, toll clearance operations and reporting facilities
Institute of
Moscom Limited
Infrastructure
29
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
30. System’s Architecture
Institute of
Moscom Limited
Infrastructure
30
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
31. Toll Collection
•
Most effective for congested highways and bridges (100,000
vehicles and over)
Institute of
Moscom Limited
Infrastructure
31
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
32. IRR @12% Discount Rate
Assumption 67% paying
•
•
•
Jogoo Road: IRR
Old Bagamoyo Road:
Gayaaza Road:
Institute of
=
=
=
Moscom Limited
Infrastructure
32
31.2%
27.24%
27.10%
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
33. IRR @15% Discount Rate
Assumption 67% paying
•
•
•
•
Jogoo Road: IRR
=
28.7%
Old Bagamoyo Road:
=
23.34%
Gayaaza Road
=
24.5%
The rates are more robust at 80% motorist paying
Institute of
Moscom Limited
Infrastructure
33
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
34. IRR 12@% Discount Rate
Assumption 80% paying
•
•
•
Jogoo Road IRR
Old Bagamioyo Road
Gayaaza Road
Institute of
=
=
=
Moscom Limited
Infrastructure
34
38%
34%
37.4%
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
35. IRR 15@% Discount Rate
Assumption 80% paying
•
•
•
Jogoo Road IRR
Old Bagamioyo Road
Gayaaza Road
Institute of
=
=
=
Moscom Limited
Infrastructure
35
33.30%
35.00%
29.4%
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
36. Risks
•
Motorists could choose free roads and avoid toll roads
•
Construction costs could escalate given the rapidly rising
price of crude oil
•
Monopolistic tendencies on the part of the contractor
Institute of
Moscom Limited
Infrastructure
36
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD
37. Vote of Thanks
I thank you all for coming
and your keen interest
Institute of
Moscom Limited
Infrastructure
37
Development
Consultancy. Research. Education.Advocacy
Economics Research
and Consultancy
ITEC
ENGINEERING
LTD