Wednesday, February 20, 2019

Kenya risks losing Mombasa port to China over loans, Beijing denies claim: Report

  • News Desk, bdnews24.com
    Published: 2019-02-01 22:04:25 BdST

bdnews24
File Photo: A ship docks at the main port in the Kenyan coastal city of Mombasa, February 25 2013. Reuters

Kenya is reportedly staring at the risk of losing Mombasa port to China if it fails to repay loans taken for a railway project.

Beijing, however, denies claims Kenya could lose the port over as collateral for the loans.

The African country signed the multi-billion dollar deal for development of Standard Gauge Railway (SGR) linking Mombasa and Nairobi and then Nairobi and Naivasha in 2014.

“Also at stake is the Inland Container Depot in Nairobi, which receives and dispatches freight hauled on the new cargo trains from the sea port,” African Stand reported on Dec 20 last year.

In November, African Stand reported on how Kenya is at high risk of Losing strategic assets over huge Chinese debt and just after some few month the Chinese are about to take action.

Reports seen by TUKO.co.ke on Jan 14 this year, revealed Kenya attached a number of strategic assets both locally and abroad as collateral for the multi-billion SGR loans.

A train launched to operate on the Standard Gauge Railway (SGR) line constructed by the China Road and Bridge Corporation (CRBC) and financed by Chinese government arrives at the Nairobi Terminus on the outskirts of Nairobi, Kenya May 31, 2017. Reuters

A train launched to operate on the Standard Gauge Railway (SGR) line constructed by the China Road and Bridge Corporation (CRBC) and financed by Chinese government arrives at the Nairobi Terminus on the outskirts of Nairobi, Kenya May 31, 2017. Reuters

The said assets, Daily Nation reported, would be surrendered to Beijing in the event that Kenya fails to meet its end of the bargain as per the first contract signed on Mar 11, 2014, and which relates to the loan that was taken to construct the Nairobi-Mombasa railway.

The properties would not be protected by the Kenyan laws because Kenya waived its sovereign immunity when it inked the March 2014 contract with China, according to TUKO.co.ke.

“The agreement is deemed to be biased against the borrower (Kenya) because any non-performance or disputes that may arise between the two parties would be referred to arbitration in China (lender), whose fairness in resolving the dispute is not guaranteed,” it wrote in a report 18 days ago.

After the Kenyan media started reporting the risk, Chinese Foreign Ministry Spokesperson Hua Chunying said in a statement a month ago that his country had checked through documents that saw Kenya awarded the funds but found the port was never marked as security.

The Kenyan news publishers also mentioned Sri Lanka’s Hambantota port in their reports as precedent.

“The case is one of the examples of China’s ambitious use of loans and aid to gain influence around the world and of its willingness to play hardball to collect,” African Stand quoted from a Dec 12, 2017 New York Times report on Hambantota port.