SGR loan tops agenda as Mbadi leads team to China

National Treasury Cabinet Secretary John Mbadi is leading top government officials to China hoping to secure new infrastructure financing and debt restructuring.

On Wednesday, the team which includes Treasury PS Chris Kiptoo, Public Debt Management Office, Director General, Raphael Owino and President William Ruto’s economic advisors David Ndii and Mohammed Hassan met Chinan’s Finance Minister Lan Fo’an and Export and Import Bank of China (EXIM) Vice President, Yang Dongning.

“The discussion in Beijing will explore areas of enhanced collaboration while prioritising Kenya’s economic interest, ensuring that future engagements align with the country’s broader fiscal and development goals,’’ Mbadi posted on X.

”He praised Kenya’s relationship with the Asian economic powerhouse, saying that over 25 years, China has invested $9.2 billion (close to Sh1.2 trillion) in Kenya, funding projects in transport, energy and other critical areas. The China visit is comes a week after the CS hinted that the country is in talks with Chinese firms to extend the Standard Gauge Railway (SGR) to Malaba.

“A consortium of Chinese companies will build the 40 per cent of the SGR line,’’ Mbadi told the Budget and Appropriation Committee last Thursday.

Although he did not give more details on the anticipated amount, he said Kenya would source 30 percent of needed financing externally and another 30 percent (equivalent to Sh45 billion annually) locally.

“The remaining 40 per cent will be sourced from a consortium of Chinese companies who will recoup the money through tolls,’’ Mbadi told the committee.

The visit comes just days after China renewed its commitment to advance major signature projects under its Belt and Road Initiative (BRI) where the country’s premier directly addressed Kenya’s goal of extending the SGR beyond Nairobi.

China played a major role in the construction of the Mombasa-Nairobi SGR line, which was completed in 2017 at a cost of Sh327 billion and then extended to Suswa (Naivasha)— Phase 2A at a cost of Sh150 billion.

Extension of the railway line to Malaba remains the top choice for the Kenyan government, with the Kenya Railway boss Phillip Mainga revealing that the cooperation is finalising key studies that will inform relocation and investment decisions on the planned extension from Naivasha to Malaba via Kisumu.

In an exclusive interview with the Star, Mainga said that the corporation, through a consultant, had completed the relocation action plan study after identifying the corridor for the construction of the railway line, with a final report expected to be ready by the end of this month.

This will be handed over to the National Land Commission, which will then move ahead with the relocation and compensation programme.

The railway line will run through Narok, Bomet, Nyamira, Kisumu and finally Busia County. An Environmental and Social Impact study that assesses potential impacts and mitigation measures in consultation with Project-Affected Persons (PAPs) is also expected to be ready by April.

Kenya Railways has also commissioned a third study on logistic hubs along the railway line with a key focus on value addition, in a move expected to promote industrialisation.

“The latest developments are a major boost to the development as the government, through the Transport and Treasury ministries, continues to engage investors on funding of the project which is expected to commence in the second half of this year.”

Apart from the new SGR financing plan, Kenya is likely to negotiate for loan restructuring with China as the East African nation runs against time to reorganize its tight fiscal plan amid limited revenue generation and maturing loans.

Last week, Mbadi hinted at a plan to negotiate a loan buy back plan with multilateral lenders even as 80 per cent of its external loans are due by 2034.