MPs Want SGR Deal With The Chinese Attaching Mombasa Port As Collateral Reviewed

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Kenya Ports Authority PHOTO/COURTESY

Members of Parliament (MPs) now want a clause in the multibillion standard gauge railway (SGR) loan contract with China reviewed.

In a report tabled before Parliament, National Assembly’s Public Investments Committee (PIC) argued that the loan agreement in the KSh 364 billion project was skewed against the Kenya Ports Authority (KPA).

The committee revealed that the government listed KPA and the Kenya Railways Corporation (KRC) as borrowers.

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This means that the two state-owned corporations will pay China’s loan on default.

Further, the committee said the government will be forced to surrender KPA should it fail to pay the loan on time.

“A reading of the agreement left no doubt that KPA and KRC were borrowers and liable to repay the loan through their assets without immunity. This put the assets of KPA at risk in the event of a default

“The committee recommends that the National Treasury should renegotiate the entire payment arrangement agreement with a view to discharging KPA from the contract and replacing it with KRC,” PIC said in a report.

In its response, KPA argued that it doesn’t have the capacity to hold sovereign authority.

“Only the Government of Kenya had such capacity. The clause could not be enforced against KPA. This was a mistake apparent on the face of the record,” KPA said.

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KPA added that it had no copies of the preferential credit loan agreement.

However, the committee did not disclose the amount that has so far been paid by KPA to China.

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