The proposed cancellation of the Sh85 billion Japanese-funded Likoni Bridge project has raised fresh questions about the government’s infrastructure priorities, with concerns emerging over the decision to abandon favourable financing terms and the possibility of turning to Chinese contractors.
A report by the Nyakundi Report has raised concerns about the circumstances surrounding the proposed cancellation of the Mombasa Gate Bridge project, pointing to possible political influence, corruption and the interests of powerful individuals in the infrastructure sector.
The project was expected to provide a permanent solution to the long-standing transport challenges at the Likoni ferry crossing, which connects Mombasa Island to the South Coast.
Thousands of commuters rely on the ferry daily, often enduring long queues, delays and safety risks while crossing the channel.
The bridge project had been under development since December 2019, when Kenya signed a loan agreement with Japan.
By the time the proposed cancellation emerged, important preparatory activities had already been completed, including the bridge designs, consultancy arrangements and procurement process.
The first tranche of financing had also been disbursed.
However, despite the progress made, the project remained stalled for nearly two years, raising questions about what had prevented its implementation.
The latest development followed a letter from the National Treasury directing the State Department for Roads to immediately cancel all commitments connected to the project. The directive reportedly covers existing contracts, consultancy arrangements and other obligations linked to the Japanese-funded bridge.
Business Daily columnist Jaindi Kisero first brought attention to the letter, describing the development as a major disappointment after years of preparation. His account also raised concerns about the growing influence of Chinese contractors in Kenya’s major infrastructure projects and their connections to influential political figures.
An individual familiar with the project reportedly suggested that financial interests could be behind the decision to abandon the Japanese arrangement, although the claims have not been independently established.
Questions Over the Financing
One of the biggest concerns surrounding the proposed cancellation is the favourable nature of the original Japanese loan.
The financing agreement reportedly carried an interest rate of just 0.1 per cent, a 12-year grace period and a repayment period of 30 years.
It also included a grant element estimated at Sh6 billion, making it one of the most favourable financing arrangements available for a major infrastructure project.
Critics argue that abandoning such terms could expose Kenya to significantly higher costs if the government proceeds with an alternative financing model involving pension funds and institutional investors.
The proposed arrangement is reportedly expected to involve a securitisation structure and Chinese contractors. Unlike the Japanese concessional loan, funds raised through pension schemes and institutional investors would require commercial returns.
This has raised concerns that the government could end up paying more for the same infrastructure project, with financing costs potentially reflected in construction charges and other long-term obligations.
Senator Okiya Omtatah has also demanded answers over the decision, questioning whether public policy is being influenced by private financial interests.
He has warned against allowing government decisions to serve individuals seeking financial benefits at the expense of taxpayers.
Concerns Over Public Funds and Japan Relations
The proposed cancellation has also raised questions about the money already committed to the project.With designs completed, consultants engaged and financing already disbursed, critics want the government to explain how much public money has been spent and what financial consequences Kenya could face if the agreement is terminated.
There are also concerns over commitment fees and other obligations arising from the years of preparation.
The Treasury has reportedly advanced the argument that the Japanese-funded project is too expensive and that the government could use domestic resources to construct the bridge at a lower cost. However, critics say a proper comparison of the two financing options has not been made public.Japan’s involvement in Kenya’s infrastructure development has also added another dimension to the controversy.
The country has supported major projects around Mombasa, including work connected to the port and the development of the Dongo Kundu Special Economic Zone.
The proposed cancellation is particularly sensitive because Japanese Foreign Minister Toshimitsu Motegi reportedly placed the bridge project among the key issues during his visit to Kenya in May.Abandoning the agreement could therefore affect the relationship between the two countries and raise questions about Kenya’s commitment to existing development partnerships.
Meanwhile, residents and commuters who depend on the Likoni ferry continue to face daily transport challenges as the long-awaited bridge remains unbuilt.
The controversy has placed the National Treasury and the Ministry of Roads under pressure to explain the reasons behind the proposed cancellation, disclose the financial implications and clarify whether an alternative arrangement would offer better value for public money.
At the centre of the debate is whether Kenya is abandoning a highly concessional financing agreement for a genuinely cheaper alternative or opening the door to a more expensive arrangement whose benefits could favour a select group of contractors and politically connected individuals.
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