Cabinet Secretary for Transport and Infrastructural Development Kipchumba Murkomen has laid bare the details of the contract between Kenya and china that helped immediate former President Uhuru Kenyatta build the country’s first Standard Gauge Railway (SGR), the most expensive infrastructural project in the country.
The contract mentioning four parties, Kenya being the borrower through the National Treasury, the lender being Export Import Bank Of China, the end user which is the Kenya Railways Corporation and China Road And Bridge Corporation as the contractor has brought to light some revelations of sweeping powers given to the Chinese lenders, including requiring arbitration of any dispute to be held in Beijing, the reason why authorities, including the former Head of State, refused to make the contract public even after a court order ending years of speculation on what the country got its self into.
Kenya borrowed 1.6 US dollars at a 2 per cent interest per annum, with a 0.25 per cent commitment fee, a 20-year loan with a seven-year grace period.
“The borrower shall pay to the lender a management fee on the aggregate amount of the facility equal to US$4 million in one lump within 30 days after this agreement becomes effective but not later than the first disbursement date in any case,” read the statement in part.
The deal signed by former National Treasury Cabinet Secretary Henry Rotich and Li Ruogu, the President of the Export and Import (Exim) Bank of China in December of 2014, the country was required to pay $137.59 million as insurance fees.
The contract also provides that any goods purchased using proceeds from the SGR will be sourced from China preferentially.
However, the details of assets owned by the Kenya Ports Authority being placed as collateral as reported by the media were missing.
The Chinese Export and Import Bank fined the country Sh1.312 billion ($10.8 million) in the year ended June for loan defaults.
Murkomen said that he shared the copies of the document with both Houses; majority leader Kimani Ichungwa of the National assembly and Arron Cheruiyot of the senate for them to be tabled in the respective houses.
The CS has also called for the revision of the contract saying that 20 years was such a short time to repay the loan.
