Chinese Envoy Maintains SGR is Viable, No Kenyan Assets to Be Seized

May 21, 2019

Chinese ambassador Wu Peng has allayed fears that key Kenyan assets could be seized should Kenya default on its loans.

Wu Peng, who arrived in Nairobi six weeks ago, maintained that Kenya is a sovereign state. He called for common sense, noting that assets in a country are protected by international law.

The envoy was speaking to the Daily Nation at the Chinese Embassy in Nairobi. He also insisted that the Standard Gauge Railway is viable, adding that China has full confidence in Kenya’s ability to make profits from SGR.

Below are some excerpts from the interview:

There were expectations that the President’s China visit would secure funding for the Naivasha-Kisumu phase of the railway. It didn’t happen and the government later said the issue was not on the agenda. At what stage was that funding dropped from the agenda?

I really don’t know where those expectations came from. Funding for Naivasha-Kisumu SGR was not on the agenda. The Kenya government is focused on operations of Mombasa-Nairobi SGR. This is a smart and responsible move from your government.

SGR was from inception planned to extend across the Uganda border and maybe even to serve Rwanda and DR Congo. Might terminating at Naivasha kill the project vision and make it less viable?

China supports Kenyan efforts to improve infrastructure connectivity. This is of vital importance to economic development. In the annex of joint communiqué of the leaders’ roundtable from the recent Belt and Road Forum, Northern Corridor in Africa linking Mombasa to countries of the Great Lakes region and Trans-Africa highway is included. However, Rome was not built in a day. I believe SGR will not stop in Naivasha.

Does that mean you will eventually fund extension to Kisumu and beyond?

Of course, China fully respects Kenya’s opinion and decision on when to start Naivasha-Kisumu line. We believe SGR is economically viable. Note that in first year of operations, Mombasa-Nairobi SGR has earned Sh10.33 billion, which is close to the operating cost of Sh12 billion. It’s never easy for a railway project to achieve nearly break-even in a year. Kenyan and Chinese operators deserve credit for that achievement. China has full confidence in Kenya’s ability to make profits from SGR.

Kenyans have been concerned that the deals with China on SGR financing have not been made public. Would secrecy clauses raise suspicion that there is something to hide? Would China object to the documents being made public?

Let me declare this: There is no secret between the Chinese and Kenyan governments. Any loan agreements between China and Kenya are in line with international practice. None of Kenyan national assets has been mortgaged for the SGR loan and neither would any national asset be seized or controlled by China, even in a situation of default.

There have been fears that in the event of Kenya defaulting on the loans, key assets like Kenya Ports Authority and Kenya Railways Corporation could be seized.

These assumptions are groundless and I don’t think Kenya will default. Sometimes I think we should have common sense. Kenya is a sovereign state. Any asset in your country is protected by international law and should be respected by other countries. These are unnecessary worries.

Read the full interview HERE

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