MPs want deal mortgaging Mombasa port to China renegotiated
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Loading... - Obare Munyi
- 03 Jun 2022
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Members of Parliament now want a clause in the Sh364 billion standard gauge railway (SGR) loan contract with China that attaches the port of Mombasa as collateral to be reviewed.
The National Assembly’s Public Investments Committee (PIC), in a report tabled before the House, says the loan agreement was skewed against the Kenya Ports Authority (KPA) and should be renegotiated.
The committee chaired by Mvita MP Abdulswamad Nassir says the loan repayment agreement lists KPA and the Kenya Railways Corporation (KRC) as borrowers and, therefore, liable to repay the loan owed to China Exim Bank in case of default.
Kenya waived its immunity in the matter, meaning the country would surrender KPA assets, the main one being the port of Mombasa if it fails to repay.
“A reading of the agreement left no doubt that KPA and KRC were borrowers and liable to repay the loan through their assets without immunity. This put the assets of KPA at risk in the event of a default,” reads the report.
Renegotiate payment agreement
“The committee recommends that the National Treasury should renegotiate the entire payment arrangement agreement with a view to discharging KPA from the contract and replacing it with KRC,” the report says. KPA in its response said it does not have capacity to hold sovereign authority and therefore could not plead sovereign immunity.
“Only the Government of Kenya had such capacity. The clause could not be enforced against KPA. This was a mistake apparent on the face of the record,” KPA said. It added that it had no copies of the preferential credit loan agreement since it was not a party to the agreements.
More shocking is that the committee noted that the placement of KPA in the repayment of the loan was done without the approval of the board, parent ministry and the Cabinet. According to the report, the repayment of the loan agreement in clause 17.5 referred to KPA as the borrower, contrary to the details that KPA’s only obligation was to facilitate minimum freight volumes to meet the requirements of the long-term service agreement. Read More…
