Kenya’s Road to Shanghai Now Even More Closer With the Mombasa Port Under Chinese Radar

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Is Kenya heading the Sri Lanka Way? Well, apparently the Chinese government might end up taking Kenya’s Mombasa Port should the Kenyan Government default in paying the billions it owes it.

A letter by Auditor General to KPA reveals that port’s assets were charged as security to secure loans but KPA did not disclose this guarantee in the financial statements.

Edward Ouko’s office says that KPA assets are exposed since the Authority signed agreement where it has been referred to as borrower under clause 17.5 of the loan agreement and any proceedings against its assets by the lender would not be protected by sovereign immunity.

“The agreements is biased since any non-performance or dispute with the China Exim bank would be referred to arbitration in China, whose fairness in resolving the disagreement may not be guaranteed,” reads the auditor’s report signed by F.T Kimani for the Auditor General.

“KPA did not disclose these guarantee in the financial statements,” says the letter.

KPA’s statements of profit and loss and other comprehensive income reflected operating revenue of Sh42,736,520,000 being an increase of Sh3,132,843,00 from Sh39,603,677,00 in the year ended June 30 last year.

China tightened its grip on Kenya’s economy, extending about Sh165 billion in loans last year, latest data shows.

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This saw the Asian giant stretch its lead as the country’s largest bilateral lender, with its debt stock increasing by 52.8 per cent to Sh478.6 billion in 2017, from Sh313.1 billion in 2016.The world’s second-largest economy now controls 66 per cent of Kenya’s total bilateral debt, which stood at Sh722.6 billion as at June 2017.

This rivals multinational institutions such as the World Bank and United Nations, whose combined debt stock stood at Sh526.6 billion last year.

China’s debt stock is almost certain to increase further this year as construction of the Standard Gauge Railway (SGR) enters its second phase, with Kenya said to have borrowed a further Sh165 billion for the extension of the railway line from Nairobi to Naivasha.

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