CHINA REPORTED TO DECLINE FINANCING FOR FINAL STAGE OF KENYA’S SGR

The government of Kenya has again failed to secure $3.6bn in financing that had been expected from China to finish a cross-country standard gauge railway (SGR) extending from the busy port of Mombasa inland to landlocked Uganda, say reports. President Uhuru Kenyatta had gone to Beijing asking for half of the money to be given as a grant, with the rest being a loan with soft conditions, but China declined and repeated a request for “sufficient proof of viability” for the scheme, sources told newspaper The Daily Nation.  

State-owned giant China Communications Construction Company (CCCC) finished the line from Mombasa to the capital Nairobi in May 2017, and is scheduled to finish a second leg from Nairobi north to Navaisha this summer, but the planned third leg from Navaisha to the Victoria Lake port of Kisumu, and onward to Uganda, now looks in doubt.

It was “a slap in the face for Nairobi”, commented the Nation, which separately cited “infrastructure economic experts” terming the now-truncated line as “a railway to nowhere”, for which Kenyan taxpayers are due to start paying “0.7% of the economy” to repay Chinese loans for the first legs starting in June 2019. 

The Kenyan government responded to the reports published 26 April with a statement denying that the issue of funding the extension to Kisumu had ever been on the agenda of the meeting between Kenyatta and Chinese President Xi Jinping. 

At the same time, Kenya’s transport cabinet secretary James Macharia said the new SGR to Naivasha would now be linked to the old metre-gauge line to Kisumu.

In 2016, CCCC was awarded contracts to build all three phases, plus a new port at Kisumu, but China’s reluctance to fund the long-planned third leg emerged in the media in September last year.   

China has come under critical international scrutiny for its policy of infrastructure lending, which has increased indebtedness in some developing countries.

Media report that while the Mombasa-Nairobi link carried 2.6 million passengers since its opening, it made a loss of some $98m in its first year.

President Kenyatta did return from Beijing with other infrastructure deals, however.

http://www.globalconstructionreview.com/news/china-reported-decline-financing-final-stage-kenya/