28th February, 2020
The Government Is Struggling To Pay A 36 Billion Shillings Debt Owed To The Exim Bank Of China That Financed The Construction Of The Standard Gauge Railway. The Principal Payments Is Due By June This Year. In May 2014, Kenya Signed A 327 Billion Shillings Deal With Exim Bank Of China To Build A 385 Kilometre Modern Railway Between Mombasa And Nairobi. The Loan Was To Be Repaid In 15 Years With A Grace Period Of Five Years. Transport Cabinet Secretary James Macharia Says The Government Is Negotiating With Exim Bank Of China To Allow It Access An Escrow Account That Is Holding 17 Billion Shillings. The Escrow Account Taps The Cash Collected From Operations Of The Railway Line To Help In Repaying The Loan. The Chinese Bank Holds Substantial Control Of The Account Especially At Default Or When Railway Revenues Fail To Meet The Loan Obligations Threshold. Financing Of The Sgr Was Structured Into Two Phases With Government Financing 15% Of The Project Cost And The Chinese Government Meeting The Balance Of 85%.