From left: Uganda President Yoweri Museveni, Chinese PM Li Keqiang, President Uhuru Kenyatta, Paul Kagame of Rwanda and South Sudan’s Salva Kiir after Kenya and China signed the Standard Gauge Railway agreement at State House, Nairobi, on Sunday. Photo/Billy Mutai
What you need to know:
President Uhuru Kenyatta and Chinese Prime Minister Li Keqiang witnessed the signing of the financing deal at State House, Nairobi.
Also at the ceremony were Presidents Yoweri Museveni (Uganda), Paul Kagame (Rwanda) and Salva Kiir (South Sudan).
The four heads state are bound together by a deal signed last year to build an efficient regional SGR among other joint flagship projects.
China Sunday inked an agreement to fund Kenya’s railway modernisation project, paving the way for the latter to start constructing its portion of the regional standard gauge railway (SGR) just weeks after two parliamentary committees cleared the multi-billion-shilling project.
President Uhuru Kenyatta and Chinese Prime Minister Li Keqiang witnessed the signing of the financing deal at State House, Nairobi. Also at the ceremony were Presidents Yoweri Museveni (Uganda), Paul Kagame (Rwanda) and Salva Kiir (South Sudan).
The four heads state are bound together by a deal signed last year to build an efficient regional SGR among other joint flagship projects.
“We have rejected the mediocrity of simply sticking with what we have. We have found partners of equal determination,” President Kenyatta said, adding the regional SGR would be completed as soon as possible.
Out of the Sh425 billion that China pledged to Kenya last August, a total of Sh319 billion will be spent directly on constructing the Mombasa-Nairobi section of the SGR project and buying rolling stock (locomotives and wagons).
The government estimates that a total of Sh327 billion will be spent on the 609km Nairobi-Mombasa stretch. Under the agreement signed on Sunday, Sh213 billion of the Chinese loan will go towards SGR while Sh106 billion will finance procurement of locomotives and wagons.
Mr Keqiang said that the railway construction company would ensure African workers were trained and laws adhered to.
Kenya also signed two financing deals on Saturday with China’s Eximbank, although no value was given. The government hopes to bridge the gap through the Railway Development Levy of 1.5 per cent introduced last year.
The Budget summary tabled in Parliament two weeks ago indicates that the Treasury has set a target of Sh19.4 billion in the next financial year.
“The costs of moving our people and our goods ... across our borders will fall sharply,” Mr Kenyatta told a news conference at State House on Sunday.
Officials previously said China was offering a $1.6 billion commercial loan and a $1.63 billion concessional facility for the Mombasa to Nairobi section - covering 85 per cent of that section’s estimated Sh327 billion ($3.8 billion) cost.
The new standard gauge line will supplement the underperforming narrow gauge network that links Kenya and Uganda only.
The deal signed on Sunday also hands China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, the SGR construction contract.
The decision to award the contract to the Chinese corporation has been criticised by a section of MPs who maintain the tenders were not floated competitively. Both the Parliament’s transport and public investment committees have cleared the project.
Last week, the Law Society of Kenya moved to High Court saying the public was not involved in the financing and procurement deals between the two states.
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