Kigamboni bridge: Road toll model under siege

The government has recently reviewed road toll charges at the Nyerere Bridge, Kigamboni, slashing them by around 50 percent, mainly in response to a public outcry against these charges. That is clearly good news for the people of Kigamboni. According to the MP, their ultimate wish is for the abolition of the charges altogether so that crossing the Nyerere (Kigamboni) Bridge is completely freee, as is the case with crossing other bridges in the country. It should be noted that this bridge is the first toll bridge in Tanzania.

The Bridge was financed under what has come to be known as Public Private Partnerships (PPP). The logic is that there is a huge demand for investing in infrastructre, but, governments, particularly those in developing countries, do not have adequate resources; what with huge demands on their budgets for investing in other areas such as water, health, education and what have you.

The private sector may have funds, looking for investment avenues. Various models have been worked out, whereby private capital can be used to construct public infrastructure and the private sector is reimbursed through such arrangements as revenue from road tolls charged for the use of the constructed infrastructure such as a highway or a bridge.

Construction of the 680-meter (6 lanes) Bridge started in February 2012 and was opened by HE John Magufuli, then President of Tanzania, in April 2016.

Other elements of the project include 1.0 and 1.5 kilometres approach road on the Kurasini and Kigamboni sides respectively. The cost was given at the beginnig as being 214.6bn/= of which 60 percent came from the National Social Security Fund (NSSF), and 40 percent from the Government. This means the Bridge was constructed 100 percent using domestic revenue. It is being operated as a toll Bridge during the concession period expected to last for 25-30 years.

NSSF is the Institutional Financier and Concessionaire of the Bridge project. The Fund was responsible for designing the project and financing its construction.

It also supervises operations and maintenance of the Bridge including collecting and retaining toll charges from the users. Finally NSSF will transfer the Bridge back to the Government at the end of concession period.

The bridge currently serves as the main means of crossing the Kigamboni creek reducing traffic at the Magogoni ferry crossing, and improving convenience to travellers to and from Kigamboni.

A sucessful operation of the toll bridge is a good indicator that non-governmental funds can be used to invest in the badly-needed infrastructure in the country.

In both Kenya and Uganda, PPPs have been applied to develop and operate a number of highways. Some observers have argued that Pension Funds money is ideal for use to invest in infrastructure. However, PPPs, such as the Kigamboni Bridge do face numeous risks.

These include: Construction. Operating, Design, Market and Revenue, Legal, Financial, Political, Force Majeure, and Environment Risks. These risks must be mitigated against to ensure the success of the undertaking. In the case of the Kigamboni Bridge the project may be facing market and revenue risks, given the fact that tolls have been revised downwards, and they may be abolished all together.

While we are not privy to the revenue streams generated at the bridge, there might be insufficient traffic. The revenue risk may occur when sufficient income is not available from fares or tolls, as a result of low traffic, or low tolls.

In that case, the concessionaire’s money, in this case NSSF’s money, may take much longer to be realised contrary to projections. The government may be called upon to intervene so that pensioners are not eventually adversely affected.

The Project may also face financial risks in the sense that the value of the Tanzania Shilling is likely falling with time, and with inflation. The responsibilities that fall on the shoulders of NSSF are enormous.

That the public can agitate against road tolls should be a lesson to those designing PPPs.

In the case of a road or bridge, it is important to avoid a situation where sections of the population will feel that they are being treated differently from other sections of road users. For example, a road toll on an inter-city/region highway may be easier to accept compared to one opening up a small part of the territory, where moreover, traffic is likely to be low. In only six years of operation, we see a downward revision of the tolls, over the Kigamboni Bridge. What is the outlook for the remaining 24 years?

Traffic is likely to keep on growing as Kigamboni is developed, but public interest considerations may lead to a revision of the bridge toll arrangements.