China Exim Bank cuts funds to Kenya’s standard gauge railway project due to court cases against it

Kenya’s standard gauge railway (SGR) financier, China Exim Bank cuts Sh32 billion ($320 million) worth of funds required for the second phase of the railroad, due to a barrage of court cases against the project, supplementary budget documents stated.

Allocations for the railway project dropped by Sh42 billion ($419 million), including the Sh32 billion ($320 million) held back by the lender. The remaining Sh10 billion ($100 million), which was part financing from the country’s railway development levy fund, was later reallocated to pay contractors who built the Mombasa-Nairobi section of the project and settle the management fees payable to the Chinese operator of the rail line.

Meanwhile the members of the parliament stated that “the reduction in funding for the project could result in delayed completion and increase in interest and other claims on delayed payments and increased costs of projects than originally planned.”

After the East African country secured funds from China in the last quarter of 2017, the railway project was delayed for four months due to a lack of a land compensation plan. Construction resumed in the January 2018 but was delayed once again for a week because workers protested low pay and harsh working conditions.

The 120-kilometer Nairobi-Naivasha line, which is expected to connect Nairobi to Kampala via Naivasha, Kisumu and Malaba. The contractor, China Road and Bridge Corporation (CRBC), moved to site last October and has been working since then despite numerous challenges.