Kenya seeking another Sh368 billion railway loan from China

The government is negotiating with China for a loan of about
Sh370 billion to complete the third phase of the standard gauge railway.

According to Kenya Railways Acting Director Philip
Mahinga, the corporation is also holding talks to finance a system that
will ensure the railway, its passengers, goods and equipment are secure
as they snake through sparsely populated regions in its 974-kilometre
journey from Mombasa to Malaba in Busia County.

During a
briefing about the status of the multibillion-shilling endeavour at the
Chinese embassy in Nairobi on Tuesday, the country’s Chargé d’affaires
Li Xuhang said the amount would be in form of concessional and hard
loans.

“We all know that the first phase of SGR from
Mombasa to Nairobi cost Sh327 billion and the second phase Sh150
billion. For phase 2B, negotiations between the two governments are on
so I will not give any figure at the moment,” Mr Mahinga said.

SECURITY

Mr Mahinga added that the full details would be given during the official opening of the Naivasha terminal in May.

However, an inside source said the interim amount is Sh368
billion. “SGR trains move 6,000 people daily, and we are concerned about
our operations and security of the equipment,” Mr Mahinga said.

“The
movement of trains from Mombasa to western Kenya needs to be secure
from terrorists and other challenges. We ask the Chinese government to
support us in this area.”

It is not clear how much it would cost to secure the railway line.

LOAN PAYMENT

Kenyans, the International Monetary Fund and experts have raised questions about the repayment status of the existing loans.

The
terms of repayment have also been a subject of debate following
revelations a few months ago that the port of Mombasa could be handed
over to Chinese if Kenya defaults on the loans.

Mr Xuhang said the Mombasa-Nairobi railway earned $100 million in the 2017/18 financial year.

“The
railway has created more than 50,000 jobs locally and boosted Kenya’s
economic growth by 1.5 percent,” he said during the press briefing
attended by officials of SGR management, the National Treasury, Ministry
of Transport and Infrastructure and Kenya Railways Corporation.

The
Chinese said Kenyans form a majority of the SGR managers and employees,
and that their safety is guaranteed, “contrary to negative reports in
the media”.

JOBS

They
said 25 stations out of a total of 33 have already been handed over to
well-trained local managers, and that Kenyans form the largest number of
SGR employees at 2,723 against 828 from other countries.

“The
Chinese government and people have been reading reports that Kenyans do
not support the SGR and the loans. We’ve also seen reports that the
loans are a debt trap and that the Chinese are venturing too much into
Kenya,” Mr Xuhang said.

He said China and Kenya attach
great importance to the railway, but admitted that people at the
grassroots may have reservations about it.

“We have
reached an agreement with the county government of Mombasa to conduct a
study along the railway line. We want to talk to the people and get
their views and suggestions on how to improve the SGR,” the envoy said.

China
Road and Bridge Corporation external communications officer Zhao Yang
said more Kenyans than foreigners are employed at the management and
subordinate levels of the project.

“It is important
that working conditions are improved to ensure that Kenyans are happy
with the immediate and future benefits of SGR. It’s important that
Kenyans own it. It will be very useful and popular once it reaches
Kisumu,” he said.