Kenya, China in talks over Sh1.2trn railway financing
A Rift Valley Railways train. A report the by the Transport ministry says Kenya is negotiating with China on the modern railway line. FILE
What you need to know:
China is likely to push for its contractors to handle the high-speed standard gauge railway line connecting Kenya, Uganda and Rwanda.
Uganda and Rwanda have indicated plans to equally enter deals with China as each country seeks to raise funds for the project.
Western firms could be locked out of the Sh1.2 trillion East African modern railway project after confirmation that Kenya has opened discussions on financing with China.
For the two countries to strike a deal, China is likely to push for its contractors to handle the high-speed standard gauge railway line connecting Kenya, Uganda and Rwanda.
“The government of Kenya is undertaking bilateral financing negotiations with the government of China,” reads part of a report by the Ministry of Transport and Infrastructure.
Treasury has the option of securing funds from any of Chinese export credit institutions — the China Export Import (Exim) Bank, the China Development Bank, Sinosure or the China Agricultural Development Bank.
Uganda and Rwanda have indicated plans to equally enter deals with China as each country seeks to raise funds for the project.
China’s modus operandi is to ask that a contract be given to a Chinese company after advancing funds for a project. The somewhat-tied loans have seen Chinese firms clinch tenders without competition, leaving the few qualified Kenyan firms to fight for subcontracts.
Technical conditions
Chinese firms with presence in Kenya include China Road and Bridge Corporation, Wu Yi, Anhui Construction Engineering Group and state-owned China National Aero-Technology International Engineering Corporation (Catic).
Korean-based Hyundai, Samsung and Posco; and South African firms Aveng Grinaker and Basil Read have shown interest in Kenya’s rail sector.
Local contractors have in the past protested the dominance of Chinese rivals blaming the government for setting capital and technical conditions for tenders above the reach of local firms. China has, however, defended itself saying the involvement of Chinese firms in Kenyan construction projects was above board.
Last year the Kenya Railways Corporation hinted to having entered a contract with China Roads and Bridges Company for the construction of a standard gauge rail.
The railway to be completed in 2018 will be part of a seamless system connecting Nairobi, Kampala and Kigali.
