China may take Mombasa port over Sh227bn SGR debt: Ouko

Kenya's President Uhuru Kenyatta and Chinese President Xi Jinping prepare to inspect Chinese honour guards during a welcoming ceremony outside the Great Hall of the People in Beijing on August 19, 2013. PHOTO | WANG ZHAO | AFP

What you need to know:

  • The government borrowed the billions to construct the Mombasa-Nairobi standard gauge railway (SGR), against opposition that it could become a white elephant.
  • A report by Auditor-General Edward Ouko states that the payment agreement substantively means that the revenue of the Kenya Ports Authority would be used to clear the debt.
  • The auditor notes that the agreement is biased since any non-performance or dispute with the bank would be referred to arbitration in China, “whose fairness is resolving the disagreement may not be guaranteed”.
  • Ouko accuses the KPA management of not disclosing the guarantee documents in its financial statements.

Kenya could lose the port of Mombasa to the Chinese government if Kenya Railways Corporation (KRC) defaults in the payment of Sh227 billion owed to Exim Bank of China.

Welcome!

You're all set to enjoy unlimited Prime content.