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Activists in court to force State to reveal details of SGR loan

NEWS
By Joackim Bwana | June 22nd 2021
A section of Standard Gauge Railway near Kitengela area along Mombasa road. [Elvis Ogina,Standard]

 

Two civil society groups have sued to compel the government to make public terms of the loan secured from China to construct the Standard Gauge Railway (SGR).

In the suit, the two groups say SGR is the largest capital-intensive infrastructure project ever done in Kenya, costing over $4.5 billion (over Sh450 billion), and taxpayers have a right to know its details.

The suit has been filed by Muslims for Human Rights (Muhuri) Chairman Khelef Khalifa and Institute of Social Accountability National Coordinator Wanjiru Gikonyo at the High Court in Mombasa.

“To this day, fundamental information about the project’s financing, tendering process and construction has not been released to the public. Key contracts related to these aspects of the project remain secret,” says Khalifa.

Yesterday, the two lobby groups said despite the “extraordinary expenditure of public funds”, the SGR project has been undertaken with controversy and secrecy from its inception.

The petitioners want the High Court to compel the government to make public all information pertaining the SGR contract with China Exim Bank, China Road and Bridge Corporation, China Development Bank, Africa Star Railways Company and the government of China.

Khalifa claims the Kenya Ports Authority (KPA) was used as collateral to secure the loan from China and is likely to be taken over by the Chinese government upon default in repayment.

The petitioners have sued Principal Secretary, Ministry of Transport, National Treasury and Planning, Attorney General, Solomon Kitungu and Dr Julius Muia.

Katiba Institute and the Commission on Administrative Justice have been cited as interested parties in the suit.

“The respondents impede accountability and openness and ability of Kenyans to participate in financial matters as envisioned by Article 201 of the Constitution,” said Khalifa.

He said in 2015 the Court of Appeal affirmed the SGR project was procured in violation of article 227(1) of the Constitution and section 6(1) and 29 of the Public Procurement and Disposal Act 2005.

Khalifa said the appellate court ruled that the SGR’s “take or pay agreement” was constitutionally infirm and violated article 47 of the Constitution because it lacked public participation.

Khalifa said financing of the SGR was largely obtained through a concessional and commercial loan by the China Exim Bank.

He said the National Treasury began loan repayment in January 2019 to a tune of Sh74 billion to date, which was expected to increase to Sh111 billion after a second loan became due in January 2021.

He said SGR is operated by Africa Star Company Limited, a private company which is paid costs in excess of Sh1 billion per month.

“According to government statistics, SGR has operated at a financial loss since its inception. Its operation is not generating funds to help pay back the loan that financed its construction as planned,” said Kalifa.  

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