By Emmanuel Korir
The Galana River has always promised more than it delivers. Running for nearly 400 kilometres through some of Kenya’s driest countryside, beginning from the slopes of Kilimanjaro across the vast Tana River and Kilifi hinterland before emptying into the Indian Ocean, it carries enough water to transform hundreds of thousands of acres of arid land into productive farmland. Politicians have known this for decades. Successive governments have announced plans, commissioned studies, signed agreements, and stood before cameras to declare that this time, Kenya’s agricultural future would be built on the banks of the Galana.
And all of a sudden, almost always, something goes wrong.
The latest chapter in that troubled story played out quietly but significantly last week, when it emerged that the government had been forced to withdraw a Sh38.85 billion dam project from the Public-Private Partnership framework not because of scandal or mismanagement, but because of a fundamental problem with the economics: the water would simply cost too much.
The Gap That Could Not Be Bridged
The National Irrigation Authority had set out to build the Galana Dam under a classic PPP arrangement where a private contractor would finance, build and operate the infrastructure, recovering its investment over time through water tariffs. On paper, it is a model that works in many parts of the world. In practice, it ran into a wall.
When potential contractors submitted their proposals, NIA chief executive Charles Muasya found the numbers deeply uncomfortable. The revenue that could realistically be generated from selling water to irrigation schemes, to communities along the river basin, to agricultural operations downstream could support only about Sh23.3 billion worth of financing.
The dam costs Sh38.85 billion and that leaves a financing gap of roughly Sh15.5 billion money that no private investor was willing to absorb, and which water tariffs alone could not bridge without pushing prices to levels that would make farming along the Galana effectively unviable.
“Financing gap means the revenue streams from selling the water were not enough to finance the whole project,” Muasya explained.
It is the kind of arithmetic that development economists call a viability gap, a situation where a project is economically important and socially necessary, but commercially insufficient. Bridges in rural areas, power lines to remote villages, water infrastructure in arid regions: these are the investments that change lives but struggle to generate the returns that private capital demands.
Reinventing the Model
Rather than shelve the project entirely, the government has opted to restructure it instead.
The new arrangement moves the dam out of the PPP framework and into what Muasya describes as an Engineering, Procurement, Construction and Financing model or EPCF. Under this hybrid structure, a single contractor takes on the design, construction and financing of the dam. The Kenyan government provides the guarantee. NIA sells the water. Revenue from those sales goes toward repaying the contractor.
The distinction matters more than it might appear. In a traditional PPP, the private investor carries the commercial risk , they build the project and hope the revenues materialise. In an EPCF with a government guarantee, the state absorbs the risk of revenue falling short, while the contractor is simply repaid over time from actual water sales.
It is, in effect, government-financed infrastructure delivered through a private builder.
“The government guarantees the loan, but we, as NIA, sell the water and pay back,” Muasya said, describing the restructured arrangement as a form of hybrid PPP.
Critics will note — not unfairly that this shifts the financial risk back to the taxpayer. Supporters will argue, also not unfairly, that water infrastructure in arid regions rarely pays for itself on pure commercial terms and that the alternative is no dam at all.
A History That Haunts Every Promise
For anyone who has followed the Galana-Kulalu story, a sense of cautious déjà vu is hard to shake.
The scheme has been in various stages of inception, promise and partial delivery since 2014, when the government first unveiled ambitions to irrigate 1.5 million acres across Kilifi and Tana River counties. The vision was genuinely transformative: crop yields in the tens of millions of bags, food security for a nation that still imports enormous quantities of maize and wheat, and a new economic heartland in a region long treated as a geographic afterthought.
But the early years were marked by contractual disputes, cost concerns, questions about procurement processes, and ultimately the exit of the original Israeli firm, Green Arava, which had been brought in to pilot the agricultural operations.
The project was revived in 2023 under a fresh PPP approach, with Selu Africa Limited eventually taking on 10,000 acres and producing its first significant harvests by late 2025. At the end of December last year, President William Ruto stood before cameras and declared a new milestone: the signing of a Sh40 billion contract with China Communications Construction Company Kenya Ltd to build the Galana Kulalu Dam — covering 300,000 acres, storing 305 million cubic metres of water, and delivering one billion cubic metres annually.
The dam deal that has just been restructured away from a PPP model appears to be an earlier iteration of that same infrastructure push suggesting the government has been working through successive financing models before landing on the EPCF arrangement ultimately adopted.
What it tells us is that building transformative water infrastructure in Kenya’s arid regions requires creative financing, patient capital, and a willingness to accept that the state must sometimes carry the burden that markets will not.
What This Means for Farmers and Food Security
On the ground in Tana River and Kilifi counties, the machinations of financing models means very little to them.
What farmers want to know is whether water will flow through the canals that lead to their fields. Whether the crops they plant in the dry season will survive. Whether the Galana scheme will finally become what decades of official speeches have described a reliable, year-round source of irrigation water that frees them from the tyranny of rainfall.
That promise is still on the table. The EPCF restructuring is intended to keep the dam on track, not cancel it. NIA’s own records indicate that by December 2025, contracts had been signed for the engineering and construction phase, with technical teams given the mandate to begin establishing a base within the broader 1.75 million-acre Galana and Kulalu ranches.
For the roughly 70,000 households expected to benefit from clean drinking water once the dam is operational, the financing model is a secondary concern. For the farmers waiting to irrigate the next 300,000 acres, the key question is whether construction will actually begin, and on what timeline Since the History in Galana has a habit of stretching timelines.
The Wider Lesson
The Galana Dam episode is not just a story about one project in one river basin. It is a lens through which to examine a much bigger question: how should Kenya finance the water and irrigation infrastructure it needs?
Private capital is efficient and disciplined, but it requires returns. Water infrastructure in underserved regions often cannot generate those returns at least not at tariff levels that communities can afford. The PPP model, for all its theoretical elegance, keeps colliding with this reality.
The alternative direct government financing works, but requires fiscal space that Kenya, carrying a heavy debt load, does not always have. The EPCF hybrid attempts to thread the needle: private delivery, public guarantee, revenue-based repayment.
Whether it works over the long run at Galana will depend on how much water is actually sold, at what price, and whether agricultural production on the scheme reaches the scale that makes repayment achievable.
Those are questions the river cannot answer. The answers will come from the boardrooms of NIA, the budget offices of the National Treasury, and ultimately from the fields of Kilifi and Tana River where farmers have been waiting, in one form or another, for a very long time.
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Emmanuel Korir is a journalist who tells stories where markets, people, and policy meet