The Standard Gauge Railway (SGR) contract, a document that has been the subject of discussion during the administration of former President Uhuru Kenyatta has been released, albeit partially.
Transport Cabinet Secretary Kipchumba Murkomen on Sunday, November 6 made the document public, but not in its entirety, with a Non-Disclosure Agreement clause legally binding Kenyan government not to make the contract public.
The agreement, which saw the Jubilee administration build Kenya’s most expensive infrastructure, was signed by then-Treasury Secretary Henry Rotich and Li Ruogu, President of the Export and Import Bank of China.
The lender, the Export-Import Bank of China, was to lend Kenya $1.6 billion at the time, which equated to KSh190.77 billion at the time.
The applicable interest rate on the loan was 2% per year, with a 0.25 percent management fee and a 0.25 percent commitment fee.
This means that Kenya paid China a one-time fee of KSh476 million to manage the loan. This sum was paid within 30 days of the contract’s signing.
The SGR agreement with China was a 20-year (240 months) loan with a grace period of seven years (84 months). This means that Kenya is required to repay the loan in 13 years (156 months).
There was a clause in what appears to be the SGR deal that required all goods, technologies, and services purchased by the loan facility to be imported solely from China.
In Kenya, the goods and services purchased from China under the agreement for the construction of the Nairobi-Mombasa SGR were tax-free.
If a disagreement arises from the agreement, it will be resolved through friendly consultation. However, if no solution is reached within 30 days, the dispute will be resolved solely by China.
“Each party shall have a right to submit a dispute to the China International Economic and Trade Arbitration Commission (CIETAC) for arbitration,” the contract states in part.
The contract adds: “The arbitration shall be carried out in accordance with CIETAC’s arbitration rules…The arbitration award shall be final and binding on both parties. The arbitration shall take place in Beijing.”
Kenya repays the loan semi-annually, on the 21st of January and the 21st of July of each calendar year, with the final repayment date on the 21st of July.
