A secret deal between Kenya Railways(KR) and the China Road and Bridge Corporation (CRBC) will see taxpayers dig deeper into their pockets to fund the operating costs of the Standard Gauge Railway.
The deal is said to compel KR to seek funding from the National Treasury, should it find itself unable to pay maintenance bills for the Mombasa-Nairobi line.
“In the event that KR is unable to secure budget allocation from the Treasury for any of the periodic maintenance, the operator shall have no obligation to undertake periodic maintenance in the relevant calendar year,” reads Clause 23.5.1 of the agreement.
Daily Nation reported that CRBC has already sent a Ksh31 billion bill to KR as the SGR wound up its second year of operation.
About Ksh800 million is from the accumulated penalties from the delayed payments according to invoices.
The deal that was signed on May 30, 2017, defined periodic maintenance to include rolling stock, track and stations whose budget was supposed to be prepared one year in advance and submitted to Kenya Railways.
The Chinese Contractor that built the railway was also only allowed to maintain the railway within the budget that Treasury was able to foot through taxpayers.
This clause left the rest to the detriment of the line, with the contract only compelling them to disclose the consequences to KR.
The introduction of the new operating company, partly owned by CRBC and undisclosed minority shareholders, has made it hard for KR to meet the operating expenses of the SGR.
In the same breath, Kenya is also expected to start repaying the loan advanced by China for the construction of the railway line from January of 2020 since the grace period expired in May 2019.
