Kenya signs financing agreements with China for new Standard Gauge Railway

KENYA SIGNS 3.8 BILLION DOLLAR RAILWAY FINANCE DEAL WITH CHINA

(Posted 12th May 2014)

Kenya yesterday finalized the 3.8 billion US Dollar loan deal which will see a Chinese construction company begin work in earnest on the new standard gauge railway line connecting the port of Mombasa with the capital Nairobi.

Additional funds are being sourced locally through a Railway Development Levy on all imports coming through Mombasa, a point disputed by other members of the East African Community where private sector representatives have raised objections to this method as it affected their import bill too, a matter now under review. A draft budget preview has seen the Kenyan government inject over 19 billion Kenya Shillings into the project for the next financial year 2014/15.

Out of the total loan of 3.8 billion US Dollars about two thirds will be dedicated to the construction of the new line while the remaining funds will pay for rolling stock and locomotives, all made in China of course.

Challenges to the deal in parliament were all resolved about 2 weeks ago though legal challenges remain in the Kenyan courts but have little chance of success.

Present at the signing were the other members of the so called coalition of the willing, comprising Uganda and Rwanda too, represented by Presidents Museveni and Kagame. Both countries are part of a tripartite deal which will see the railway line, when it reaches the border with Uganda, extended to Kampala and through Uganda into Rwanda, for the first time linking this landlocked country by rail to an Indian Ocean port.

Voices are now emerging that both Uganda and Rwanda should not wait for the Kenyan portion of the new railway line to reach the border at Tororo, but start in turn to begin construction of their sections to run concurrently, to be sure that once the Kenyan section is complete rail operations can commence immediately and not then wait a further 2 – 3 years to finish the inland line. Uganda in fact has a deal in place which however came under scrutiny recently, leaving the contracts hanging in limbo, for now while Rwanda is thought to ponder when to launch construction of their section between the Ugandan border and their capital city of Kigali.

The new railway will not just be significant for the transportation of cargo, imports as well as exports, due to the anticipated reduction of transit time and cost, compared to road transport, but will also offer a safe and fast alternative to road transport for passengers across some of the most scenic landscapes of East Africa, including traversing the Great African Rift Valley, connecting the people of Rwanda, Uganda and Kenya and bringing them closer. Completion of the Kenyan section of the railway is expected by around 2018.

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