Kenya’s Standard Gauge Railway (SGR) is set to breaking the world record once complete for being the most expensive project ever in relative terms.
President Uhuru Kenyatta was accompained with Opposition leader Raila Odinga to China to negotiate a KSh 368 billion to complete phase two to Malaba.
The new loan is expected to be injected in construction of the Naivasha-Kisumu SGR line and this would inflate the gross amount of loans Nairobi has borrowed from Beijing to about KSh 845 billion.
According to a report carried by Wednesday’s Daily Nation, it costs the GoK a whooping Sh800 million to construct a single kilometer of the rail, a cost that is estimated to be double the international average.
During the first phase of construction, China extended a KSh 327 billion loan for the now operational Nairobi-Mombasa line.
The lender pumped in an additional KSh 150 billion loan for the Nairobi-Naivasha line which is still under construction but near completion while the Naivasha-Kisumu phase is expected to gobble Sh368 billion which President Uhuru Kenyatta and Opposition Chief Raila Odinga flew to China to secure a loan for.
Kenyan taxpayers would pay close to Sh1 trillion after the whole SGR loans tick maturity. Currently, Kenya’s total public debt has crossed Sh5.4 trillion mark, something that has started to raise serious concerns that the country could be biting more than it can chew.
This comes as reports indicate that the Port of Kisumu will be Used as collateral for the loan.
It is now clear that the Port of Kisumu will be used as collateral by the government of Kenya for a loan it will be securing from the Exim Bank of China to fund the construction of the Standard Gauge Railway (SGR) that will pass all the way to Kisumu.
Recently, the Auditor General Edward Ouko, in a management letter, stated that Exim Bank would become a principal owner of the port if Kenya Railways Corporation (KRC) defaults in repaying 227 billion shillings borrowed to build the SGR.
The new signing is expected to elicit mixed reactions from many Kenyans and especially from the lake city dwellers who have been using the port as their main source of income.