Cargo is offloaded from a vessel at the Port of Mombasa. FILE PHOTO | NMG
China has denied having attached Mombasa port as collateral to its funding of the standard gauge railway line.
Chinese
Foreign ministry Spokesperson Hua Chunying said in a statement that
fears that the port risked being taken over by China should Kenya
default on the Sh327 billion loan to build the Mombasa-Nairobi SGR were
not true.
SOVEREIGN IMMUNITY
A
leaked report by the Auditor-General’s office showed that in 2013, the
Kenya government had waived the port’s sovereign immunity in order to
use it as a security for the Chinese loan.
“We have
checked with the relevant Chinese financial institution and found that
the allegation that Kenyan side used the Mombasa Port as a collateral in
its payment agreement with the Chinese financial institution for the
Mombasa-Nairobi railway is not true,” Mr Chunying said in a December 25
statement.
The leaked report, whose authenticity
Auditor-General Edward Ouko neither confirmed nor denied had fanned
fears that Kenya had exposed one of its most strategic assets for
recovery should the loan fall in default.
The auditors found that the KPA’s assets were committed as
collateral for the Sh327 billion SGR loan that China gave Kenya in 2014.
The
Ministry of Transport, the Treasury and State House are believed to
have played key roles in brokering the agreement, which was sealed
during President Kenyatta’s visit to Beijing.
FINANCIAL REPORT
“KPA
assets are exposed since it signed the agreement where it has been
referred to as a borrower under clause 17.5, and any proceedings against
its assets by the lender would not be protected since the government
waived immunity on the KPA assets by signing the agreement,” the
November 16 audit letter to the KPA management says.
The
KPA generated Sh42.7 billion in revenue in the year to June 2017, a 7.9
per cent growth over the previous year, according to its latest
financials report.
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