China Exim Bank, the financier of Kenya’s Standard Gauge Railway, has reduced the funding of the second phase of the construction by Sh32 billion because of the impediment from the court case against the project.
According to the supplementary budget documents presented to parliament, the money allocated to the project reduced by Sh42 billion including Sh32 billion that the bank is withholding.
The deficit, which is Sh10 billion, was used to pay the contractors who built the initial phase of the project and the Chinese operator of the rail line.
“The State department had projects such as Nairobi-Naivasha SGR allocation reduced by Sh42 billion of which Sh32 billion was from a donor because of court cases, while Sh10 billion railway development levy fund was re-allocated to Mombasa-Nairobi SGR project,” the supplementary budget II said.
Parliament responded to the decision stating: “The reduction in funding for the project could result in delayed completion and increase in interest and other claims on delayed payments and increased costs of projects than originally planned.”
The second phase of the project has been faced with several problems since construction started in the fourth quarter of 2017. Some of these problems include a court case filed by the National Environment Tribunal which temporarily put a halt to the construction of the railway.
The second phase entails a 120-kilometre line from Nairobi to Naivasha, going through the Nairobi National Park. Eventually, the line will link Nairobi to Kampala through Naivasha, Kisumu, and Malaba.
The project was also delayed last September thanks to lack of land compensation. Additionally, the project was further delayed by workers as they complained about harsh working conditions and low pay.
The SGR project is in competition against Tanzania’s Dar es Salaam line which aims to link Uganda and Rwanda which are landlocked.
