Kenyan Members of Parliament are urging for renegotiations of Chinese SGR rail debt. According to parliamentary transport committee chair David Pkosing, the entire loan framework should also be renegotiated in light of the impact of the Covid-19 pandemic on Kenya’s finances.
“The parliamentary transport committee is urging the country to renegotiate the Sh 389bn loan it agreed with China to build the Sh 348bn standard gauge railway between Mombasa and Nairobi, and cut the operating cost of the line by half,” said Mr. Pkosing.
Meeting the monthly payment
The rail service, which has yet to make a profit, is run by China Road and Bridge Corporation, a subsidiary of the railways builder, China Communications Construction Company. Kenya currently pays Africa Star, China Road’s operating company, Sh 108m a month to run the service. Since 2017, Kenya has failed to meet the monthly payment for 21 months, according to the Voice of America news site.
At present, Kenya owes Africa Star about $380m in unpaid bills. In April, Ukur Yatani, secretary to the treasury cabinet, issued a supplementary budget that envisaged Sh 77.6m in repayments to the China Export Import Bank, and Sh 33.7bn to the China Development Bank.
“There are some investment decisions we have taken that are not in the best interest of the country, so it is time we start re-evaluating them and renegotiating with people who gave us the money so that we are able to survive. Our economy is beaten and we are not able to pay. We are not saying the debt is not there, but we simply want to renegotiate what we owe the Chinese and the terms of payment,” said Kimani Ichung’wa, chairman of the Parliamentary Budget and Appropriate Committee.
The railway carried more than 19,000 passengers and 421,000 tons of cargo between Nairobi and Mombasa in July. In April it was reported that it had made a reduced loss for its second year of operation. So far, Ethiopia and Angola are the only African countries that have succeeded in renegotiating their debts to China.
