The Kenyan and Ugandan governments are facing an arbitration case in London over the Ksh266.4 billion (USD 2,005,900,000) SGR construction case.
Two companies, KU Railways Holdings Limited and RVR Investments (PTY) Limited have filed claims at the London Court of International Arbitration stating that the two governments breached their contracts.
According to a statement issued by Parliament, the Managing Director of Kenya Railways, Phillip Mainga stated that the case was instituted in April 2020, with the proceedings still ongoing.
Reportedly, the two governments entered into various agreements with several companies for the construction and management of the railroad to transport goods and passengers.
However, it is stated that the Kenyan government’s construction of the SGR collided with tracks between Kenya and Uganda.
Reportedly, the agreements signed by the railway corporations of both countries had the two bodies transfer their railway assets to RVR in return for 11.1 per cent of gross revenue during the concession period.
The concession was to take effect immediately and remain in force for 25 years for the freight services and 5 years for the passenger services.
However, the deal failed to sail through after RVR was said to have shut down its offices.
"One of the main claims against GoK is that the construction of Standard Gauge Railway (SGR) by Kenya directly harmed RVR because the tracks for the two lines shared a common right of way in most locations”, Mainga explained.
On March 5, the Attorney General of Kenya, Justin Muturi, attended the arbitration proceedings in London.
However, the Committee is scheduled to engage the National Treasury and the Office of the Attorney General on how to amicably resolve the matter.
Additionally, the Managing Director of Kenya Railways stated that aside from the Ksh266 Billion figure quoted from the case, the company was also indebted to China Exim Bank.
According to the Corporation, Treasury, took out a loan to finance the SGR which was to be paid back by the revenues netted from the venture, a figure that is yet to be realized years down the line.
