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World


Kenya : China to take over Mombasa port over unpaid huge Chinese loan

Kenya : China to take over Mombasa port over unpaid huge Chinese loan

Nairobi, Dec 22 (UNI) China is likely to take over Kenya's Mombasa port if Kenya Railways Corporation defaults in the payment of a loan from Exim Bank of China. Kenya used Mombasa port to secure the loan which was taken from the Chinese bank to finance construction of the standard gauge railway (SGR).

A leaked audit report shows that the government waived sovereign immunity on the Kenya Ports Assets on signing the agreement with China thus exposing Kenya Ports Authority to foreclosure by China Exim Bank.

The report said "The payment arrangement agreement substantively means that the Authority's revenue would be used to pay the Government of Kenya's debt to China Exim bank if the minimum volumes required for [rail] consignment are not met," auditor F.T. Kimani wrote. "The China Exim bank would become a principle over KPA if KRC defaults in its obligations, reports African Stand and All Africa news.

In an interview with Kenyan media, KPA managing director Daniel Manduku expressed confidence that the contract clauses would not cause difficulties. "There is no risk of losing the port. In fact, we will pay this loan ahead of time," he said. "We can even take another loan and pay it on time."

KRC accepted the multi-billion-dollar loan in order to build the Mombasa-Nairobi standard gauge railway (SGR), with construction services provided by China Roads and Bridges Corporation (CRBC), a division of state-owned conglomerate China Communications Construction Company (CCCC).

The SGR, also known as the Madaraka Express, is a diesel-powered passenger and freight rail service connecting Nairobi and Mombasa. Its construction was plagued by cost overruns, and outside observers have questioned its economic viability. 80 percent of the project was financed by China.

SGR reported a near Sh (Kenyan shilling) 10 billion loss in its first year of operations.At the current estimates, KPA generates Sh50 billion a month or Sh600 billion a year in revenues.

In December 2017, the Sri Lankan government lost its Hambantota port to China for a lease period of 99 years after failing to show commitment in the payment of billions of dollars in loans.

In September 2018, Zambia lost Kenneth Kaunda International Airport to China over debt repayment.

UNI XC KPV 1844

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