Ksh368b Naivasha-Kisumu SGR loan will be secured with Kenya’s property

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Kenya’s delegation has already met with Exim Bank and China’s Commerce and Foreign Aid ministry officials to conclude negotiations on the second loan of Sh368 billion.

The loan is to complete the third phase of the standard gauge railway from Naivasha to Kisumu.

During a briefing about the status of the multi-billion-shilling endeavour at the Chinese embassy in Nairobi on Tuesday, the country’s Chargé d’affaires Li Xuhang said the amount would be in form of concessional and hard loans. This means the loan will be below-market interest rates, by grace periods or a combination of both.

“We all know that the first phase of SGR from Mombasa to Nairobi cost Sh327 billion and the second phase Sh150 billion. For phase 2B, negotiations between the two governments are on so I will not give any figure at the moment,” Mr Mahinga said.

However, an inside source said the interim amount is Sh368 billion. “SGR trains move 6,000 people daily, and we are concerned about our operations and security of the equipment,” Mr Mahinga said.

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“The movement of trains from Mombasa to western Kenya needs to be secure from terrorists and other challenges. We ask the Chinese government to support us in this area.”

It is not clear how much it would cost to secure the railway line.

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Ms Serem denied claims the Chinese are using loans to trap African countries in unpayable debt with prized state assets used as collateral.

“On the issue of debt trap, it all depends on how you model your facilities. What will the road or railway do? It is like walking in a bank like Kenya Commercial Bank to give you a loan, if you use it wisely, it will bring many fruits and that is the concept of BRI. As a government, we invest on areas that boost our economy,” said Ms Serem.

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