Transport CS Macharia confirms loan deal did not come through, saying priority is on completing the line to Naivasha.
The much-hyped extension of the Standard Gauge Railway (SGR) from Naivasha to Kisumu will now have to wait after the Government opted to delay the multi-billion shilling project.
Instead, the Transport Cabinet Secretary James Macharia yesterday said they would focus on completing the SGR line to Naivasha, and link it with the old track to western Kenya and Uganda.
The anticipated Sh380 billion loan for the project did not, after all, come through. It is unclear what happened, or when the plans changed but Mr Macharia said Kenya will have to devise other favourable ways to raise funds.
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Speaking to the Saturday Standard
from China last evening, Macharia confirmed that the deal was not signed. “No, we didn’t (sign the deal). We shall first complete connectivity of SGR and the MGR (Metre Gauge Railway) at Naivasha and then rehabilitate the line to Malaba border. At the same time we shall commercialise special economic zones along the Northern Corridor in order to generate economic returns,” he said.
He said the link will be ready by August, adding that the rehabilitation of the old line will coast about Sh40 billion.
The CS explained that returns generated from the revamped line will go towards the Kisumu SGR project. “Eventually we will have to borrow, but you borrow what you can pay back, and then after you generate some returns you put those returns into a bigger project, which will be this one from Naivasha to Kisumu,” he told the State broadcaster, KBC, earlier in the day.
This is the second time Kenya is leaving China without credit. During the Forum on China Africa Cooperation last September in Beijing, Kenya wanted a loan for extending the third phase of the SGR.
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Yesterday, Kenya’s high expectations of a credit facility from the Chinese Exim Bank to fund the railway project whose construction was to commence in August, were dampened when no such deal was communicated.
Instead, President Kenyatta’s press team talked of Kenya securing to Sh 67.5 billion financing at the ongoing global infrastructure conference organised by Chinese President Xi Jinping.
The PSCU story said President Kenyatta witnessed the signing of two project delivery agreements through concessional financing and Public Private Partnership (PPP).
The projects that benefit from from the deals signed include the Konza Data Centre and Smart Cities Project to be undertaken by Chinese telecommunications giant, Huawei at a cost of Sh17.5 billion and the construction of the 18km expressway from Jomo Kenyatta International Airport (JKIA) to James Gichuru Road in Westlands, which will cost Sh51 billion. “This is private sector money and the government will not be borrowing for the project,” said Macharia.
The construction of the expressway is expected to ease traffic flow on the busy Mombasa Road as part of the ongoing interventions by the government to decongest key roads in Nairobi.
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It will be the first of its kind in Africa and has unique design features that combine underpasses, overpasses, exits as well as a Bus Rapid Transit (BRT) component covering the entire stretch. The President also witnessed the signing of the operation and maintenance service agreement for the Nairobi-Naivasha segment of the SGR after its completion in August.
Earlier on Thursday, while pitching for the SGR funding, Macharia told the second Belt and Road Forum for International Cooperation the benefits of the railway to Kenya and the greater East African region.
He said the SGR’s performance has exceeded expectations as more than 2.6 million passengers and 3.6 million tonnes of cargo have been transported since its commissioning.
Opposition leader Raila Odinga, who had travelled with the President to China, backed the call to finance construction of the railway line from Naivasha, through Narok, Bomet and Sotik to Kisumu.
President Kenyatta and Raila attended the conference bringing together 37 world leaders. Yesterday, the President presided over the Kenya-China Business forum in Beijing, seeking to strengthen business ties between the two nations, with a focus on increasing trade.