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Why China said no to Uhuru’s Sh. 368 billion SGR loan request

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Kenya’s SGR Project: Details have emerged on why China refused to lend President Uhuru Kenyatta’s government a fresh loan of Sh. 368 for the extension of the Standard Gauge Railway line.

The fresh multi-billion loan was supposed to facilitate the construction of the SGR phase between Naivasha and Kisumu.

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According to reports, China refused to give out the loan after the government failed to show how viable the project would be. Reports also say that China was not willing to give out the loan as a grant or loosen their tight conditions on it.

This is despite the Uhuru team agreeing to allow China to operate and run the railway line until it recovers all the monies spent on the project during a visit to China early this year.

SGR to end in Naivasha after China says no to Uhuru

The failure to secure the loan left an egg on the face of the president. It also means that the SGR now terminates at Suswa.

In an effort to salvage the project which has so far consumed hundreds of billions of money, the government has announced plans to link it with the old railway line that connects to Eldoret, Kisumu and Malaba.

Linking the two railway lines will consume an additional Sh. 40 billion. Currently, the old railway line is situated some 43 kilometres from where the SGR will terminate.

The SGR project has been one of Kenya’s most controversial projects. It’s viability and cost have regularly been put to question. So far, the SGR line between Nairobi and Mombasa which is in operation has raked in losses of over Sh. 10 billion.

“President Uhuru Kenyatta had asked for half of the money to be given as a grant and the balance be in a loan with more relaxed conditions. And, though Kenya accepted to allow the Chinese to build, run and hand it over once they recoup their money, the Chinese reportedly insisted on proof that the SGR will be viable. Nairobi asked for the grant to be given as part of the Belt and Road Initiative, officials said. The Chinese, though, insisted on collateral, something Nairobi had gone to Beijing to avoid,” a report that appeared in the Saturday Nation said.

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