- The Chinese operator of the standard gauge railway (SGR) has demanded clearance of unpaid bills before handing over SGR fully to Kenya. The pending bills amount to billions of shillings.
- Africa Star Railway Operation Company Ltd (Afristar), which is majority-owned by China Road and Bridge Corporation (CRBC) was the contractor of the project
The Chinese operator of the standard gauge railway (SGR) has demanded clearance of unpaid bills before handing over SGR fully to Kenya. The pending bills amount to billions of shillings. Africa Star Railway Operation Company Ltd (Afristar), which is majority-owned by China Road and Bridge Corporation (CRBC) was the contractor of the project. It was contracted in May 2017 to run the passenger and cargo trains on the SGR. The Chinese company has put clearing of its debts as a condition for fully transferring operations of SGR to Kenya in May next year.
As of last year, the pending payment amounted to Sh38 billion. KRC chairman Omudho Awitta revealed that KRC and Afristar came to an agreement that KRC (Kenya Railways Corporation) can take over subject to some conditions including clearing of outstanding payments. The negotiations started in 2019.
In addition to the outstanding payment on account of SGR, Keny has borrowed Sh420 billion to construct the modern line from Mombasa to Nairobi and for the purchase of engines and coaches. The line started operations in 2017, and was then connected with another new track, costing $1.5 billion (Sh162.9 billion) and also funded by Chinese loans. Under the agreement signed in 2017,Afristar has been managing the ticketing system, landing and offloading of cargo and collection of passenger fares. Since March this year, Kenya started a gradual takeover of SGR operations from the Chinese firm including ticketing, security and fuelling functions on the SGR passenger and cargo trains. The deal is to transfer the full operations on the track to Kenya by May next year. Therefore by May Kenya has to settle the unpaid bills or restructure the liability into a debt that will be repaid over a longer period.
Currently, the pandemic has hit Kenya’s government revenues and limited access to commercial loan markets, forcing the country to turn to the World Bank and the International Monetary Fund (IMF) for direct budgetary financing.
