Stakeholders in the Sh67 billion Nairobi toll road concession have differed over delays in the project, adding a new layer of uncertainty on the already controversial issue.

German construction conglomerate Strabag International, says an audit of the project by the potential financiers has taken longer than expected, contributing to the current delay.

"From the sponsors' side, the contract was ready for signing in December 2009 but the World Bank has to complete its due diligence and compliance audit of the project," said Ms Diana Klein, Strabag's spokesperson.

The World Bank's private sector lending arm, the International Finance Corporation (IFC), however, maintained that completion of the audit depends on Strabag which is the lead sponsor of the Nairobi toll road project.

"The time required to conduct due diligence depends on the sponsor with whom we are cooperatively pursuing the matter," said Mr Desmond Dodd, IFC's spokesperson for Sub Saharan Africa in an email to Business Daily.

IFC says due diligence on the ownership structure of the concession company is aimed at establishing whether it remains as approved in the 2006 concession contract.

But Ms Klein maintains that the ownership structure has not changed and remains as it was over the four years it has engaged with the Kenyan Government and the World Bank.

"The involvement of the Russian investor in Strabag goes back to April 2007, when his (Oleg Deripaska) investment was made public. This was before the bid submission at the end of May 2007, and long before the consortium was chosen as the preferred bidder in November 2007," she said in reference to the Bank's decision to subject the consortium to a new round of due diligence.

Strabag says firms associated with the Russian billionaire have a deep business partnership with it.

Basel Cement is a joint partner in all its projects, while another firm - Rasperia, also controlled by Mr Deripaska - purchased a 30 per cent stake in Strabag in April 2007.

The sponsors and the potential financiers, however, agree that the Russian firm is not in the World Bank's blacklist.

"The Russian investor or any of his companies are not blacklisted by the World Bank," said Ms Klein. None of them however denies that his presence in the Strabag consortium is the reason the IFC is conducting a repeat due diligence long after the toll road tender had been awarded to the Strabag consortium.

It is the review that is holding back critical funding for the project, keeping the Nairobi Motorway Company - the consortium made up of Strabag and the Israeli construction giant Shikun & Binui - in a frustrating wait.

"We have always tried to accelerate the process and have put a lot of effort into negotiations with the Government, their advisors and other stakeholders. We are also now supporting the due diligence process and hope to receive clearance very soon," said Ms Klein.

Exploring finance

The IFC said it was exploring financing for the private sector sponsor of the project with the involvement of the World Bank's partial risk guarantee and the Multilateral Investment Guarantee Agency (MIGA) units.

"Due diligence is a normal part of the investment process for financing private sector projects. The IFC undertakes due diligence on every sponsor related to our financing to ensure they can meet the high standards we require across a range of issues," said Mr Dodd without giving details of the audit.

Parliament approved the concession contract, in December last year clearing what was initially a major obstacle for the Nairobi toll road project.

Strabag says the approval came four days after the Nairobi Motorway Group was registered.

Initially, Members of Parliament had demanded that the company be incorporated for the concession contract to get their approval.

It is an internationally acceptable practice that the concession company be registered during the financing phase of the project, and after the concession contract has been signed.

The Strabag and Shikun & Binui consortium won the tender to build the road project in Nairobi in September 2007 but it was cancelled amid claims that the contractor had been single sourced.

At the time, Shikun & Binui chief executive Mr Uri Shani, said in a statement the final agreement was subject to negotiations regarding financing and conditions between the companies and the Government.

Toll charges

The consortium would build the 77 kilometre road in Nairobi under a 30-year build-operate-transfer deal.

Motorists using the facilities pay a fee referred to as "toll charges" to the concessionaire.

The charge is determined during bidding and is agreed on prior to implementation.