Kenya Insights

Tag: Sgr contract

  • Petition Seek To Probe China Roads and Bridge Corporation In SGR Sh777B Overpayment

    Petition Seek To Probe China Roads and Bridge Corporation In SGR Sh777B Overpayment

    A petition has been filed in the Senate to establish why Sh777 billion was overpaid to China Roads and Bridge Corporation (CRBC), the suppliers of facilities and rolling stocks during the construction of the Standard Gauge Railway (SGR) by the State department for Transport.

    This even as the State department is said to have allocated Sh97.3 billion for the construction of the Mombasa – Nairobi SGR seven years after the completion of the project.

    A petitioner, Bernard Muchere in his documents tabled before the Senate wants the lawmakers to also establish the authenticity of the amount spent to develop SGR, which he claims was aggregated to Sh1.18 trillion notwithstanding that the contract sum was Sh407billion.

    “The amount spent to develop SGR aggregated to Sh1.18 trillion notwithstanding that the contract sum was Sh407 billion indicating that China Roads and Bridges and the suppliers of facilities and rolling stocks were overpaid by Sh777billion,” reads part of the petition.

    According to Muchere, the SGR project was schemed by China Road and Bridges Corporation which benefitted the Chinese at the expense of Kenyans.

    Establish authenticity

    He further wants the Senators to establish the authenticity of Sh63.9billion expenditure by the National Treasury for the development of Nairobi-Naivasha SGR, whereas work on that part of SGR was completed and commissioned in December 2019.

    “The petitioner prays that the Senate intervenes in this matter with a view to undertake an inquiry into the inconsistency in financing the SGR project between the National Treasury, State Department of Transport and Kenya Railways Corporation,” reads part of the petition.

    Muchere who is a Fraud Risk Management Consultant further alleges that the SGR project did not meet the criteria for a public project neither did the contract and related debt qualify as a public contract and public debt.

    Muchere avers that the National Treasury debt register shows three loans 2024006, 2014008 and 2015023 aggregating to Sh466.41billion ($5.08billion) from Exim Bank of China.

    Aggregate receipt

    In addition, KRC in its financial statements shows aggregate receipt of Sh539.27billion loans as of June 30, 2020 from the Exim Bank of China and the State Department of Transport in its Appropriation Act (Budgets) upto the June 30, 2021 financial year shows Appropriation in Aid (AIA) aggregating to Sh387.9billion from the government of China.

    Muchere in his petition argues that there is inconsistency in loans relating to the SGR as reflected in the books of the National Treasury, State Department of Transport and Kenya Railways Corporation (KRC) in terms of the lender and the amount.

    Muchere in his petition argues that the development appropriation Acts (budgets) for 2015/2016 to 2020/2021, the aggregate expenditure estimates relating to SGR from Mombasa to Naivasha were Sh604.3billion comprising direct payments (AIA loans) of Sh436.9billion and Sh159.9billion receipts not classified and Sh7.5billion exchequer issues.

    The petitioner also contends that there appears to be two types of loans, one from Exim Bank of China aggregating to Sh544.2billion ($5.08billion) and the other Sh387.9billion from the Government of China, asking the lawmakers to seek clarification on which lender betweent the Exim Bank of China and the Government of China extended SGR credit facilities.

    “The alleged loan of $5.08billion from the Exim Bank of China to fund the SGR project was not paid into the Consolidated Fund contrary to Article 206 (1) of the Constitution, instead ‘Forms of irrevocable  notice of drawdowns’ substituted for payment of loan into the consolidated fund,” the petition reads in part.

    China Road and Bridge Corporation (CRBC), a subsidiary of Fortune Global 500 company China Communications Construction Company (CCCC)

  • AG Fights Quest for Disclosure of Sh450 Billion SGR Contract With China

    AG Fights Quest for Disclosure of Sh450 Billion SGR Contract With China

    If Attorney General Kihara Kariuki has his way, Kenyans will never know details of the multi-billion shilling Standard Gauge Railway agreement signed with Chinese contractors.

    Mr Kariuki wants a petition filed by two activists before the Mombasa High Court seeking disclosure of details of the Sh450 billion contract dismissed, terming it a frivolous case.

    The AG says that Ms Wanjiru Gikonyo and Khelef Khalifa have not exhausted all avenues of dispute resolution available to them, and that the petition was not properly before court.

    Mr Khalifa had, in letters dated December 16 2019 and May 13 this year, written to the AG and Principal Secretaries in the Ministries of Transport and the National Treasury requesting details of the agreement between the Kenyan government and all service providers or third parties involved in operation of the SGR.

    He also requested for all contracts for carrying out feasibility studies relating to the construction, operation and servicing of the SGR and all documents relating to expression of interest for the financing, construction, management and servicing of the railway.

    In his grounds of opposition, however, the AG argues that the petition is frivolous and an abuse of the court process for not providing any proof of the existence of the request for information.

    “Lack of the request for information infers that the petitioner did not follow up the matter exhaustively and should not be granted audience by the court,” argues the AG.

    The AG says that the petitioners have not availed any documentation in support of the petition thus it (petition) is defective with no foundational basis.

    “The existence of the request for information is at the centre of the petition and its non-existence renders the petition incurably defectively, there is no petition without request for information alluded,” argues Mr Kariuki.

    According to the AG, should the court not strike out the petition, it will occasion misuse of the court’s time and resources.

    “The lack of request for information infers that the petitioner did not follow up the matter exhaustively and should not be granted audience by the court,” argues the AG.

    Public documents

    The petitioners want all contracts, agreements and studies related to the construction and operations of the SGR made public, arguing that keeping the documents confidential violates the law and discourage transparency in governance.

    They argue that documents related to the project and its financing have never been made public despite it being the most expensive project undertaken by the government.

    “SGR is the largest, capital-intensive infrastructure project ever constructed in the country, but despite this extraordinary expenditure of public funds, the project has been undertaken with controversy and secrecy from its inception,” argue the petitioners.

    According to the petitioners, fundamental information about the project’s financing, tendering process and construction has not been released to the public.

    Loan repayments

    The petitioners argue that the National Treasury began loans repayments for the project in January 2019 to the tune of Sh74 billion to date, and increased to Sh111 billion after a second loan became due in January this year.

    “Further, the SGR is operated by Africa Star Railway Company Ltd, a private company, which is paid operating costs in excess of Sh1 billion per month,” argue the petitioners.

    The petitioners argue that according to government statistics, the SGR has operated at a financial loss since its inception.

    “Thus its operations are not generating funds to help pay back the loans that financed its construction, it is not publicly known what the consequences of a default in loan repayment would be, according to the agreement between Kenya and China,” argue the petitioners.

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    Mr Khalifa and Ms Gikonyo argue that they are concerned that such a heavy capital-intensive project with wide-ranging impact on public resources and citizens’ livelihoods was undertaken with no public participation and insufficient information on the implications on the public purse and other assets.

    Apart from the AG, the petitioners have sued Principal Secretaries in the Ministry of Transport and the National Treasury.

    They want a declaration issued that failure by the respondents to provide information sought and also to publicise it on the basis of the request by Mr Khalifa is a violation of the right to access to information.

    The petitioners also want an order issued compelling the respondents to provide at their (respondents’) costs, information sought by Mr Khalifa in his letters to them.

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