Finer details of the contract between Kenyan government and China Road and Bridge Corporation (CRBC)on the Standard Gauge Railway (SGR) will remain under wraps, it has emerged.
This is after CRBC refused to share the crucial information to a task force mandated to review the Ksh327 billion SGR that has been termed as skewed.
“The negotiation for a review of the operation and maintenance contract did not progress because the operator refused to provide information that would enable the team to determine reasonable costs of SGR operations,” Nation quotes a highly placed source.
A team comprising of representatives from the Presidential Delivery Unit, the Office of the Attorney-General, Kenya Railways (KR), Ministry of Transport, the National Treasury and CRBC was formed to review the contracts to ensure Kenya protected its interests and assets.
The Kenya Railways currently owes CRBC over Ksh31 billion in fixed and variable costs, that it has not been able to cover since the SGR has been unable to break even. The amount is expected to hit Ksh60 billion by the end of this month.
On November 1, 2019, CRBC invoiced Kenya Railways for $476 million (Ksh47.6 billion), of which Ksh43 billion was approved and so far Ksh7.3 billion has been paid.
Reports indicate that Kenya Railways is struggling to pay firms providing security in the SGR, and also paying an insurance premium of Ksh170 million.
It is feared that Kenya could have exposed its assets to Chinese Exim Bank, after listing them as collateral. Some of the assets in question include the Mombasa Port, but it is yet to be confirmed.
CRBC has won all the contracts of SGR from feasibility study,construction of the railway, procurement of materials including locomotives, and is currently operating the SGR through Africa Star Railway Operation Company.
To operate the trains, CRBC charges a fixed amount of Ksh1.3 billion per month, or about Ksh40 million daily.
Apart from the charges, Kenya faces another hurdle as the five-year grace period has expired and it will be required to start paying the loan next month, with the first batch of Ksh25 billion set to be paid back.
By the end of 2020, Kenya is expected to have repaid at least Sh50 billion of the loan.