Details Of 42-Page SGR Contract Released By Murkomen

Roads, Transport and Public Works Cabinet Secretary (CS) Kipchumba Murkomen honoured his promise of making public the details of the Standard Gauge Railway (SGR) contract.

Barely a week after being sworn in, the CS released details of the document across social media and sent it to newsrooms on Sunday, November 6 which uncovered details of the deal struck between the Kenyan government and the Chinese lender Export-Import Bank of China for the Ksh320 billion project.

"I have spoken to everybody I thought was a person of influence in government and privy to the SGR contract, but they have said they have never seen the SGR agreement. I don't want to name those I spoke to, but once I get into the office, I will look for it," Murkomen had promised to the Wetangula-led committee during his vetting.

Murkomen added that he shared copies of the agreement with the National Assembly Majority Leader Kimani Ichungwah and his Senate counterpart Aaron Cheruiyot for them to table it in the respective Houses of Parliament.

One of the surprises of the contract was that the total loan extended to Kenya was Ksh191 billion (USD1.6 billion) with a two per cent per year interest. 

Kenya was also given 20 years to repay the loan, with a grace period of seven years, which allowed it to align itself in the payment without drawing penalties.

Other conditions include the government should create an escrow account with Ksh25 billion at all times to restore confidence in the lender that the borrower would still have the capability of dispensing its loans on time.

"The maturity period for the facility shall be two hundred and forty (240) months, among which the grace period shall be eighty-four (84) months and the repayment period shall be one hundred and fifty-six (156) months.

"The borrower shall pay to the lender a management fee on the aggregate amount of the facility equal to US$4 million in one lump within 30 days after this agreement becomes effective but not later than the first disbursement date in any case," read the statement in part.

The contract also granted permission to the contractor to import all its raw materials from China.

The document however did not disclose if Kenya Ports Authority (KPA), and specifically the Mombasa Port, was offered as collateral for the loan.

This is according to a report by KTN News on Sunday which claimed that KPA was mandated to set aside part of its revenue to settle the date alongside revenues realised by SGR.

KPA was also listed as collateral for the loan facility and the Asian superpower would take over its operations as well as that of the Kenya Railways Corporation in the event Kenya failed to repay the loan.