Kenya turns to China yet again for another loan worth $3.7 billion even as her Chinese debt continues to swell

Madaraka Express train
  • Kenya is currently negotiating with China for a loan of about Sh370 billion (3.7 billion) to complete the third phase of the standard gauge railway.
  • Kenya Railways is also holding talks to finance a system that will ensure the railway, its passengers, goods and equipment is secure.
  • The 2nd phase of Standard Gauge Railway between Nairobi-Naivasha will be officially opened in May.

The government of Kenya is currently negotiating with China for a loan of about Sh370 billion (3.7 billion) to complete the third phase of the standard gauge railway.

According to Kenya Railways Acting Director Philip Mahinga, the corporation is also holding talks to finance a system that will ensure the railway, its passengers, goods and equipment are secure as they snake through sparsely populated regions in its 974-kilometre journey from Mombasa to Malaba in Busia County.

“SGR trains move 6,000 people daily, and we are concerned about our operations and security of the equipment,” Mr Mahinga said.

The movement of trains from Mombasa to western Kenya needs to be secure from terrorists and other challenges. We ask the Chinese government to support us in this area.”

During a briefing about the status of the multi-billion-shilling endeavour at the Chinese embassy in Nairobi on Tuesday, the country’s Chargé d'affaires Li Xuhang said the amount would be in form of concessional and hard loans.

We all know that the first phase of SGR from Mombasa to Nairobi cost Sh327 billion and the second phase Sh150 billion. For phase 2B, negotiations between the two governments are on so I will not give any figure at the moment,” Mr Mahinga said.

Mr Mahinga added that the full details would be given during the official opening of the Naivasha terminal in May. However, an inside source said the interim amount is Sh368 billion ($3.68 billion).

Apart from the $1.6 billion commercial loan and $1.6 billion concessional loan from the China Exim Bank to build the first phase of the SGR, several other loan deals have been signed, raking up the total cost of the Standard Gauge Railway, which also happens to be Kenya’s largest infrastructure project since independence and stirring debate on Kenya’s ability to repay the loans.

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