Inside SGR Contracts Made Public by CS Kipchumba Murkomen

File Photo of Standard Gauge Railway Passenger Train
File Photo of Standard Gauge Railway Passenger Train
File

Just a week after being sworn in as Transport Cabinet Secretary, Kipchumba Murkomen made good his promise to make the Standard Gauge Railway (SGR) contract  public.

On the evening of Sunday, November 6, the CS made public the elusive document peeling back the mask on the terms of the contract between the Kenyan Government and the Chinese lender Export-Import Bank of China.

For instance, the document showed that the total loan extended to Kenya was Ksh191 billion (USD1.6 billion) with an interest rate of two per cent per year.

The country was also given a 20-year repayment period with a grace period of seven years meaning that the Kenya had a window period to adjust itself in the payment without garnering penalties.

Transport Cabinet Secretary Kipchumba Murkomen during his vetting on Wednesday, October 19, 2022.
Transport Cabinet Secretary Kipchumba Murkomen during his vetting on Wednesday, October 19, 2022.
File

The terms and conditions also required that the state should create an escrow account with Ksh25 billion at all times to restore confidence in the lender that the borrower would still be able to dispense loan repayments on time.

"The maturity period for the facility shall be two hundred and forty (240) months, among which the grace period shall be eighty four (84) months and the repayment period shall be one hundred and fifty six (156) months.

"The borrower shall pay to the lender a management fee on the aggregate amount of the facility equal to US$4 million in one lump within 30 days after this agreement becomes effective but not later than the first disbursement date in any case," read the statement in part.

The contract also gave the contractor rites to import all its raw materials from China.

While appearing at the Parliamentary vetting, Murkomen had argued that the 20-year repayment period was too short for the loan taken.

He advocated that the terms should be renegotiated to allow repayment window of at least 50 years.

The document, however, failed to mention if the Kenya Ports Authority (KPA), and specifically the Mombasa Port, had been put up as collateral for the loan.

A report by KTN News on Sunday, however, claimed that KPA was mandated to set aside part of its revenue to settle the date alongside revenues realised by SGR.

KPA was also put up as collateral for the loan facility and the Asian country would take over its operations as well as those of the Kenya Railways Corporation should Kenya fail to settle the loan.

Regarding the raw materials, the report claims that the contractor was exempted from paying any excise duty and the agreement barred the National Treasury or the Government from making the contents of the report public.

The agreement was first signed in December 2014.

Fille image of the busy Mombasa Port in Mombasa County, Kenya
A photo of the busy Mombasa Port in Mombasa County, Kenya
Photo
KPA