CHINA-KENYA: BECAUSE OF BRI DEBT KENYA COULD RISK LOSING MOMBASA PORT TO CHINA

The Maritime Executive on December 20, disclosed that in a recent report Kenya's Auditor General had warned that Kenya runs the risk of losing control of the Port of Mombasa if it should default on loans from state financial institution China Exim Bank. He pointed out that the terms of a $2.3 billion loan for Kenya Railways Corporation (KRC) specify that the port's assets are collateral, and they are not protected by Kenya's sovereign immunity due to a waiver in the contract. KRC accepted the multi-billion-dollar loan in order to build the Mombasa-Nairobi standard gauge railway (SGR), with construction services provided by China Roads and Bridges Corporation (CRBC), a division of state-owned conglomerate China Communications Construction Company (CCCC). The auditor F.T. Kimani wrote "The payment arrangement agreement substantively means that the Authority's revenue would be used to pay the Government of Kenya's debt to China Exim bank if the minimum volumes required for [rail] consignment are not met. The China Exim bank would become a principle over KPA if KRC defaults in its obligations." In addition, any dispute with China Exim Bank would be handled through an arbitration process in China, not in Kenyan courts. Separately, in an interview with Kenyan media, Kenya Port Authority (KPA) Managing Director Daniel Manduku expressed confidence that the contract clauses would not cause difficulties. He said "There is no risk of losing the port. In fact, we will pay this loan ahead of time. We can even take another loan and pay it on time."





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