CS Kipchumba Murkomen releases secrets of Kenya's SGR contracts [Details]

Various documents that were signed to facilitate the financing of the Standard Gauge Railway from Mombasa to Naivasha were publicised on Sunday, November 6, 2022.

The Mombasa-Nairobi phase cost Sh327 billion, while the extension to Naivasha costs Sh150 billion.

Transport and Roads Cabinet Secretary Kipchumba Murkomen said he had shared the agreements with Parliament Majority Leaders Kimani Ichung’wa and Aaron Cheruiyot for tabling in the National Assembly and Senate.

Roads and Transport CS Kipchumba Murkomen speaks during his vetting in the National Assembly Pulse Live Kenya

The contracts signed in 2014 have remained hidden from the public for 8 years, despite efforts to make the documents available.

“As promised, I have released the SGR agreements to the people of Kenya. I have given a copy to the Majority Leaders Kimani Ichung’wa and Aaron Cheruiyot for them to table in the respective Houses of Parliament. I have also shared a copy with the media,” he said in a post.

The agreements were shared in three batches, namely the Buyer Credit Loan Agreement for the Mombasa - Nairobi stretch and Nairobi - Naivasha section, as well as the Preferential Buyer Credit Loan Agreement.

One of the most contentious issues surrounding the contract is whether Kenya’s assets, such as the Port of Mombasa, are at risk if the country defaults on the loan.

According to the agreements, Kenya Ports Authority committed to becoming a guarantor if the National Treasury (borrower) defaults on payments.

A look at the 21-page agreement revealed that KPA and Kenya Railway Corporation had listed its assets as security for the loan.

Kenya’s $3.2 bn Chinese built Standard-Gauge Railway (SGR) ranked as the only remarkable railway line in Africa and seventh globally ece-auto-gen

Clause 17.5 of the document reads, "Each of the borrower, KRC and KPA agrees that in any proceedings against it or any of its assets (present or future) in connection with this agreement, no immunity (whether characterised as sovereign immunity or otherwise) from such proceedings shall be claimed, by it of with respect to its assets (present or future), and it irrevocably waives any right of immunity (whether characterised as sovereign immunity or otherwise).”

Mombasa Governor Abdulswamad Nassir also confirmed that the port was part of the guarantee.

The documents also gave the China Eximbank authority to demand payments from KPA without seeking permission from the government, if the loan defaulted.

Standard Gauge Railway train Pulse Live Kenya

Clause 5.2.5 of the agreement added that “ In an event of default occurs and its continuing, the security created under Clause 5.2.1 above shall become immediately enforceable and China Eximbank, after giving 14 days prior notice the borrower, but without consent by KRC and the borrower, may issue a written instruction to KPA notifying KPA of the event of default and requiring KPA to deposit the amounts due and payable to KRC under the Long Term Service Agreement into an account designated by the China Eximbank.”

SGR Contract Download link