Doubts persist over SGR while Kenya denied funding

Even after finally getting support from the opposition and Uganda, as requested by China last year, Kenya failed for the second time to secure funding for the Naivasha-Malaba section of the Standard Gauge Railway (SGR), putting the fate of its first two phases in jeopardy.

Instead, the government obtained a compromise of 40 billion shillings for the modernization of the line between Naivasha and Malaba.

Even opposition leader Raila Odinga, who was named the special envoy for Africa's infrastructure in Beijing last year to convince the SGR to convince China to release 380 billion shillings to finance the final stage of a project they had launched.

As a result, Kenyans have found themselves with an infrastructure element that economic experts have called "railroad is nowhere" and that taxpayers are expected to start paying 0.7% of the economy in loans. Chinese from June 2019.

During his last visit to Beijing, President Kenyatta had hoped to obtain the loan for the third stage of the planned railway project in Kisumu and the change of plan was to be a great disappointment.

In an interview with Saturday Nation James Macharia, secretary of the Transport Cabinet (CS), said the country had prioritized a 40 billion shillings envelope for the modernization of the Metropolitan Railroad between Naivasha and Malaba before the start of discussions on the financing of the SGR between Naivasha and Kisumu.

"We have agreed to work as a priority on the modernization of the metric track railway so that once construction is underway between Nairobi and Naivasha completed in August, we can transport the goods to Malaba on time", said Mr. Macharia, adding that the upgrade work will begin in two months.

And, in a dispatch, PSCU announced Friday that the government had secured some 67 billion shillings of project funding at the Beijing Belt and Road Summit, through concessional financing and public-private partnerships (PPPs).

"The projects include the Konza Data Center project and smart cities to be undertaken by the Chinese telecommunications giant Huawei for a cost of 17.5 billion shillings and the construction of the JKIA Nairobi-James Gichuru highway in part of a public-private partnership agreement reached with China Road and Bridge Corporation for Sh51 billion, "he said.

President Uhuru Kenyatta thanked China for the projects of the Belt and Road Initiative (BRI) which, he says, develop economic activities and unlock potential for prosperity in many developing countries, including Kenya .

"The Belt and Road Initiative has forged cooperation in the development of critical sectors, including infrastructure development, education and capacity building, trade facilitation and investment, agricultural modernization, promotion of industrial and energy connectivity. Together, these developments are expanding economic activity and unlocking the potential for prosperity, "President Kenyatta told world leaders.

In 2017, Kenya signed the China Exim Bank financing agreement, which will be used to finance its construction through the China Roads and Bridge Company (CRBC).

This is bad news for Uganda, which opened a dry port last month in Naivasha, as it hoped that the agreement with SGR with Kisumu would help it to conclude the agreement allowing it to mobilize nearly 200 billion shillings of funding for its own line from Malaba to Kampala.

China's reluctance to finance the third phase could result from the poor performance of the Nairobi-Mombasa line, which Mr Macharia had declared last July to the parliamentary committee on investment lost 11 billion shillings.

"On average, the line recorded a monthly loss of 750 million shillings during the 2017/18 fiscal year, mainly due to weak freight activities. However, the project will now turn and generate a profit of 5 billion shillans by June 2019, an average of 420 billion shillings of profit per month, as we increase freight volumes, "said M Macharia.

According to the Kenya Ports Authority (KPA), SGR freight transported more than $ 16.2 billion in the last nine months from November to November, or 180 million shillings per month, with daily load capacity exceeding 800 containers out of 1,700 arriving at the port of Mombasa.

China and Kenya seem to agree that the RRS can only be economically viable if it is linked to Uganda. In its current state, the SGR is still struggling to reach its break even though it has been operational since June 2017. In its first year of operation, the Mombasa-Nairobi line recorded a profit. of 10.33 billion shillings.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that pbadenger transport services yielded a mere 1.6 trillion shillings. Freight services launched last January yielded 8.72 billion shillings at the end of last year.

However, the government pays China Communications Construction Company one billion shillings a month for the operation of the railway. That's 12 billion shillings a year to run a railroad that is not only in deficit, but is supposed to be repaid later this year.

In May 2014, Kenya signed a $ 3.233 billion (3 billion shillings) loan agreement with Chinese bank Exim Bank, including a $ 1.633 billion commercial loan and $ 1.6 billion in concessions for the construction of a modern 385 km railway line between Mombasa and Nairobi.

The five-year grace period granted by China Exim Bank ends this year. Starting in June, taxpayers will pay 56.7 billion shill, or 0.7 percent of the economy, to the Chinese for funding the SGR component in Nairobi Mombasa.

Experts say that it is no wonder that China has refused to lend more money to Kenya.

"If you have one of your colleagues who is having financial problems and you know they're coming back to ask you more money and you know that they may never repay, will give them you? This is the human aspect, "said Robert Shaw, Public Finance and Policy Expert.

"China has realized that it is undertaking projects all over the world without due diligence, so it has decided to take a closer look at its loan portfolio," she said. he declared.

Kampala, which was supposed to hold the key to unlock the funds of the SGR, agreed with Kenya to build a railway line in 2008, but the arrangements only came to fruition in 2012. The Kenya was in the final stages of negotiations with China for Mombasa. -Nairobi line SGR.