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Kenya fails to secure $3.6b from China for third phase of SGR line to Kisumu

Nairobi naivasha sgr
A section of the Nairobi-Naivasha standard gauge railway track under construction. China’s reluctance to fund the third phase of Kenya’s SGR project is seen as arising from poor performance of the cargo business on the initial Nairobi-Mombasa section, which began operation in July 2017. PHOTO | AFP 

By ALLAN OLINGO
  Kenyan President Uhuru Kenyatta returned from China without funding for the third phase of his signature standard gauge railway (SGR)— a critical segment of the Northern Corridor project that is supposed to link the port of Mombasa with the Great Lakes Region’s landlocked states.

Instead, Kenya bagged some $400 million it says will be used to upgrade its 120-years old metre gauge railway to Malaba on the border with Uganda.

President Kenyatta had hoped to secure $3.68 billion from China—in loans and grant—to take the SGR line from Naivasha in Central Rift Valley to the lakeside town of Kisumu, and on to the Malaba border crossing from where Uganda would take over its construction to Kampala and beyond.

Kenyan officials put up a brave face on their failure to secure funding for this phase of the SGR project but people familiar with the negotiations said the change of fortunes came as a big disappointment for President Kenyatta, who has positioned the multimillion-dollar railway as a key pillar of his legacy.

Transport Cabinet Secretary James Macharia, who spoke to The EastAfrican on phone from Beijing, said Nairobi will henceforth treat upgrade of the Naivasha to Malaba metre gauge railway segment as a priority, even as it pursues funding for the remaining Naivasha-Kisumu-Malaba section of the SGR line.

“We have agreed to work on upgrading the metre gauge railway as a priority so that once construction of the Nairobi-Naivasha section is complete in August, we can evacuate goods to Malaba on time,” Mr Macharia said, adding that the upgrade works will start in two months’ time.
Recalibration of SGR plans

Kenya’s Foreign Affairs Minister Monica Juma, had earlier signalled this recalibration of SGR plans when she told our Beijing correspondent that the Kisumu line was not a priority.

“Another loan for extending the SGR [to Kisumu] is not the most urgent thing. It is still a matter under negotiation, and we have to involve partners like Uganda, because the SGR is a regional project that seeks to link the Indian and the Atlantic oceans,” she said.

“In the meantime, we are talking about the establishment of a special economic zone in Naivasha.”
News of the failure to secure funding for the final phase of Kenya’s SGR project came even as it emerged that President Kenyatta had secured $67.5 billion from China to build a data centre in a technology city currently under construction outside Nairobi and an expressway through the capital.

That the Chinese authorities are willing to pump billions of dollars into new projects but not spend a cent more on the SGR is consistent with the Beijing’s recent concerns about the viability of the mega railway line.

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