SGR contract which gave China sweeping powers made public
SGR contract which gave China sweeping powers made public by the Transport and Infrastructure Cabinet Secretary, Kipchumba Murkomen.
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.
Documents disclosed by the government after years of secret have revealed that the Standard Gauge Railway (SGR) contract signed by Kenya grants its Chinese financiers broad authority, including the requirement that any disagreement be arbitrated in Beijing.
Kenya was required to keep the terms of the deal under wraps by the contract, which helped retired President Uhuru Kenyatta in constructing what was Kenya’s most expensive infrastructure project.
For this reason, authorities, including the former Head of State, refused to make the contract public even after a court order.
According to the documents that Murkomen made available, China agreed to give Kenya $1.6 billion (or Sh190.77 billion at the current currency rate) for a 2-year loan at a rate that includes a 0.25-percent commitment fee.
A $4 million (Sh476 million) management fee was paid by the taxpayers thirty days after the deal was signed.
The contract for the SGR agreement specifies that it is a 20-year loan with a seven-year grace period. Kenya was required to return the loan in 156 months (13 years) and to set aside 42.06% of the railroad’s earnings for repayment.
The deal also supports worries that Kenya was obligated to turn to China alone for resolution in the event of a dispute, giving the Asian country a significant edge, according to experts.
“If no settlement is reached through friendly consultation, each party shall have a right to submit a dispute to the China International Economic and Trade Arbitration Committee for arbitration …” the contract states.
In the deal, Kenya was bound to establish an inland container depot in Nairobi “and its mandatory customs clearance” as well as a Railway Development Fund, that China had said should be established “to be applied in priority to make repayment of loans in relation to the project”.
The contract also demanded that Kenya first approaches China to purchase any goods from the proceeds of SGR, before going to any other market.
The deal also precludes Kenya from sharing its details.
“The Borrower shall keep all the terms and conditions hereunder in connection with this Agreement strictly confidential. Without the prior written consent of the Lender, the Borrower shall not disclose any information hereunder or in connection with this Agreement to any third party unless required by applicable law,” the deal reads.
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