Worry as China puts SGR funding on hold

Standard Gauge Railways (SGR)Phase two A, construction on 23rd August 2018 and it's aftermath. [Photo: Edward Kiplimo,Standard]

President Uhuru Kenyatta’s failure to secure funds for the second phase of the Standard Gauge Railway during this recent visit to China has raised concerns about the future of the flagship project.

Kenya and China Communications Construction Company were already in agreement over the construction of the 267km stretch from Naivasha to Kisumu, with only the finer details of the deal expected to have been finalised during Uhuru’s visit, but this was not to be.

Transport Cabinet Secretary James Macharia said the Kenyan delegation even carried the pre-drawn contract to Beijing during the China Africa Forum (FOCAC).

Chinese Premier Xi Jinping, who has been criticised for his approach of overburdening Africa with unsustainable debt, however, was said to have deferred a decision on President Uhuru’s request for a grant of half of the Sh380 billion that the project will cost.

Complete study

“All documents are ready. However, when we engaged the Chinese government, it was agreed that they do support it, but we need to complete the feasibility study, not just for Naivasha to Kisumu but also all the way from Mombasa to Kisumu so that we can establish its commercial viability,” CS Macharia told a press briefing in Beijing on Tuesday.

For it to make business sense, the proposed line has to reach Uganda in order to take over a huge chunk of the haulage business in the landlocked country ahead of the Tanzania-Rwanda SGR line.

Uganda is said to have decided to revamp its old metre-gauge railway when it became apparent that the Kenyan line could delay for up to three years.

A regional weekly recently reported that the ministers for transport and finance of the two countries were supposed to have engagements with China Exim Bank on the sections of Kisumu to Kampala via Malaba.

This, however, flopped and instead the executives from China Exim Bank flew to Kampala and later Nairobi last November to carry out due diligence on the Uganda project proposal and contract application.

Release purse strings

Mr Macharia expressed confidence that the deal could still be closed this month, adding that lessons learned from the Nairobi-Mombasa line would be key in convincing the Chinese lenders to loosen their purse strings.

“We are very happy because those projections have been done. It is not like we are estimating the kind of revenues that will be generated. Already, we know how many trains are running,” said the CS.