Treasury says Mombasa port has no adverse exposure to Chinese government
The National Treasury dismissed claims that the port of Mombasa is under risk of being taken over by China.
In a statement, Treasury Cabinet Secretary, Ukur Yatani said Kenya continues to meet its loan obligations without fail.
“Kenya will continue to honour its debt service obligation to safeguard its credit standing among nations, attract investment and promote growth and development of its people,” read the statement.
Reacting to a story published by a local daily, The Star, Yatani insisted that the port of Mombasa was in no way under threats of being auctioned terming the report alarming.
In the statement, Yatani explained that Kenya had entered into a deal with the Export Import Bank of China under three loan agreements to finance and construct the SGR, adding that loans were being serviced as per the agreement.
“The Export Import Bank of China loans due in respect of the SGR project are part of the public debt paid through consolidated fund in accordance with the PFM Act 20112,” he said.
According to the Auditor General’s report tabled in Parliament, the assets of Kenya Ports Authority were used as collateral for the Standard Gauge Railway loan.
The report revealed Kenya waived its immunity in the event of a legal dispute linked to default of servicing the loan.
KPA and Kenya Railways Corporation who are the borrowers, gave up claim to any immunity from legal proceedings or any of their assets.
“KPA assets are exposed to the risk of takeover by the lender since the authority signed the payment arrangement agreement,” the audit reads.
Kenya completed its initial phase of the 487 km SGR line from Mombasa to Nairobi at a cost of Ksh.380 billion with the bulk of the loan secured from the Chinese Exim Bank in May 2014 with a grace period of five years and repayment period of 15 years.
It also secured a further Ksh.150 billion loan from the same bank to extend the SGR network to Naivasha popularly known as phase 2A that runs between Nairobi and Suswa in Naivasha.
The government had projected May 2019 as the year for the project to break even but a recent report by the Parliamentary Budget Office (PBO) indicates that the cost of running the line outweighs the revenue it generates.
