Auditor General Edward Ouko has rubbished reports that the port of Mombasa is poised for take over by Chinese Bank, Exim Bank, in case Kenya fails to repay loan used to build the Standard Gauge Railway (SGR).
In a tweet, the Auditor General said that he has not released such a report.
“Our attention has been drawn to reports that Office of the Auditor General has released an audit report on Kenya Ports Authority for FY 2017/18. This is to clarify that the Office has not released any such report,” tweeted the auditor general.
Early today, it was reported that Auditor General had released a report indicating that the Mombasa Port could be taken over by Chinese bank, the Exim bank in case she defaults the SGR loan.
In the report signed by F T Kimani on behalf of the Auditor General Edward Ouko, he stated that the government used the Kenya Ports Authority assets as security to secure loans, but kept it under wraps in their financial statement.
“China Exim bank would become a principle over KPA if Kenya Railways Commission defaults in its obligations and China Exim Bank exercise power over the escrow account security,” read the report in part.
“The KPA assets are exposed since in the Authority signed the agreement where it has been referred to as a borrower under clause 17.5 and any proceeding against its assets by the lender would not be protected by sovereign immunity since the government waived the immunity on the Kenya Ports Assets by signing the agreement.”
The report further says that the agreement is biased since any non-performance or dispute with the China Exim bank (lender) would be referred to arbitration in China, whose fairness in resolving the disagreement may not be guaranteed.
The Kenya Ports Authority currently has an operating revenue of Ksh42.7 billion, an increase of Ksh3.1 billion (7.9 per cent) last year, when the authority had operating revenues of Ksh39.6, according to the report.
The Chinese government is reported to have taken over Sri Lanka’s Hambantota port for a lease period of 99 years for failing to show commitment in the payment of billions of dollars in loans.
Kenya owes the Exim Bank of China over Ksh200 billion.
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