Terminal 1A at JKIA in Nairobi. FILE PHOTO | NMG
Summary
- The Treasury has raised the red flag over the secret procurement of a consortium of French firms to build the new railway line whose costs have not been made public, and has declined to commit funds following a request from the Ministry of Transport.
- The Transport ministry informed the Treasury that a consortium of five French companies led by Egis Group had been tapped for the railway project on the back of a financing deal provided by Paris and commercial lender BPI France Assurance Export , drawing protests from Kenya Railways.
- Kenya Railways says procurement of the French firms is illegal and accused the ministry of meddling in its regulatory responsibility of initiating and managing railway projects, which saw it shepherd the construction of the standard gauge railway (SGR) line.
Turf wars and tendering fights have derailed construction of a
railway line linking Jomo Kenyatta International Airport to Nairobi’s
city centre, leaving a deal inked by French President Emanuel Macron and
his Kenyan counterpart Uhuru Kenyatta on the verge of collapse.
The
Treasury has raised the red flag over the secret procurement of a
consortium of French firms to build the new railway line whose costs
have not been made public, and has declined to commit funds following a
request from the Ministry of Transport.
The Transport
ministry informed the Treasury that a consortium of five French
companies led by Egis Group had been tapped for the railway project on
the back of a financing deal provided by Paris and commercial lender BPI
France Assurance Export , drawing protests from Kenya Railways.
Kenya
Railways says procurement of the French firms is illegal and accused
the ministry of meddling in its regulatory responsibility of initiating
and managing railway projects, which saw it shepherd the construction of
the standard gauge railway (SGR) line.
The turf wars
also hinge on revelations that the Cabinet is yet to approve the JKIA
rail project despite the deal being part of a multi-billion shilling
trade agreement that Mr Macron signed with Mr Kenyatta during his March
13 Kenya visit.
"In order for the National Treasury to consider the project for
funding, the ministry is requested to submit…a Cabinet approval for the
project," Julius Muia, the Treasury principal secretary, said in a
letter to his Transport counterpart, Charles Hinga. "Clarity on how the
French consortium was procured to undertake the project," added the
letter seen by the Business Daily.
In a bid to salvage
the JKIA deal, Mr Hinga belatedly roped in Kenya Railways in an effort
to convince the Treasury to back the project, especially the debt
transaction.
But Kenya Railways disowned the
transaction, arguing that the Transport ministry has no role in a
project modelled as a public-private partnership (PPP)—where private
financiers build infrastructure and recoup their investments through
avenues such as tolling.
"Kenya Railways does not have a
contract with French consortium of companies and has not initiated any
procurement for the same," Kenya Railways managing director Philip
Mainga informed Mr Hinga.
"The project hierarchy would
be from Kenya Railways as the contracting authority to PPP unit, Debt
management office and finally approval by PPP committee. The project
appraisal provided by Egis has not complied with PPP Act 2013."
The
consortium of French companies includes Egis, Sogea-Satom, Alstom,
Thales and Transdev—major players in the rail transport business.
Construction
of the rail link to JKIA was expected to be completed in 2021 and Mr
Macron viewed it as one of the key projects to cement bilateral ties
between Nairobi and Paris, promising to provide sustainable financing
projects in what was seen as dig at China.
China has
provided nearly Sh500 billion in loans for construction of the SGR line
from Mombasa to Nairobi, but some critics have expressed concerns over
the country’s growing debt burden and Chinese loans.
China
had earlier expressed interest in expanding the SGRline to JKIA and the
city centre via Syokimau. But the plan was termed costly and shelved.
Sources familiar with the rail deal see the hand of Chinese in blockade of the French deal.
"We
knew they would be unhappy and most likely the reason why it is
becoming hard to award the French the same deal," said a top official at
the Transport ministry who requested not be named.
Mr
Macron’s joint press briefing with Mr Kenyatta was symbolic given its
venue at the CBD railway terminus where the French leader repeatedly
mentioned ‘sustainable financing’ and ‘respect for sovereignty’ in what
was his way of saying that Paris funding was better than Chinese.
"We
want to create a Public Private Partnership through French consortiums
and the Kenyan government to provide sustainable financing," Mr Macron
said. "Long-term loans create too much dependency and that is what
increases the exposure of your country. I fully believe in the
sovereignty of the people and I believe Mr Kenyatta sees it the same way
too."
Mr Macron’s push for partnership saw various French firms sign deals worth over Sh300 billion during his two-day visit.
The French-Chinese rivalry over the railway deal played out immediately Mr Macron left Kenya.
The
Chinese Embassy in Nairobi organised a tour of the SGR project the
following week, inviting Kenyan government officials, MPs, journalists
and scholars.
The JKIA-Nairobi city centre railway line
was planned to decongest the capital city and reduce the time taken
between the central business district and the region’s largest
international airport—which handled 11.7 million domestic and
international fliers last year.
The distance between JKIA and Nairobi city centre is 20km and should take between 30 minutes to less than an hour.
However, travel time takes up to two hours due to traffic on the usually busy Mombasa Road.
France
has since last year been angling to be a major player in the Kenyan
railway transport business, culminating in a deal between Kenya Railways
and French shipping line and the third largest globally, CMA-CGM.
The
French shipping line committed to freight its Kenya cargo from the Port
of Mombasa to Nairobi Inland Container Depot via the SGR line.
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