The Transport Committee in parliament wants the Kenya Government to renegotiate with China on outstanding loans for the Standard Gauge Railway(SGR) and operational costs including the price of wagons.
The new line, constructed by the China Road and Bridge Corporation (CRBC) and financed by the Chinese government, is already running huge losses due to coronavirus pandemic.
David Pkosing, Chairman of Parliamentary Transport Committee says MPs want the government to seek new terms for the $4.5 billion (KSh 488 billion) loan used to put up the SGR.
“We also recommended that the entire loan framework should also be renegotiated, the original loan framework now with COVID-19 and, of course, Kenya and the world will never be the same again with this effect of COVID-19. That loan should be renegotiated downwards or agreed on even extending the time upon which we should have paid the loan,” Pkosing said.
Kenya currently pays $1 million(KSh 108 Million) every month to China’s Africa Star Railway Operation Company to run the railway.
Since 2017, Kenya has failed to meet its monthly repayments. Parliament wants the monthly cost to be brought down to $600,000 and wants to engage China on how to repay the loan.
While China has entered into a loan renegotiation with Angola, economists rule out the same for Kenya.
Angola is seen as an oil exporter, rich in minerals; thus, its debts are commodity-backed. This is as opposed to the Kenyan situation where there are no commodities-implying a high loan default risk for China.
The SGR carried more than 19,000 passengers and 421,000 tons of cargo between Nairobi and Mombasa in July 2020 when Kenya lifted the ban on movement in and out of Nairobi and Mombasa.