Kenyans are still reeling from shock following revelations that President Uhuru Kenyatta’s Jubilee government used the Mombasa Port to get expensive China loans.
The revelations came after a leaked document from the Auditor General’s office warned that China will be taking over the port if a Sh. 327 billion loan is defaulted.
The report seen by Bizna Kenya says that Jubilee used the port as security for the loan it took from the China Exim Bank to build the standard gauge railway (SGR).
The move has since left the Kenya Ports Authority (KPA) exposed. The security handover for the loan was done in 2013, when the government waived the port’s sovereign immunity order and used it as security.
According to the leaked document, the KPA management had up to November 27 to respond to the audit queries raised by Auditor General Edward Ouko.
The Ministry of Transport, the Treasury and State House are believed to have played key roles in brokering the deal, which was sealed during President Uhuru Kenyatta’s visit to Beijing.
The leaked document also says that China Exim Bank gained power to step in as principal shareholder of the KPA in the event of a loan default, setting up an escrow account for the agency’s proceeds and using the collected revenue to cover the loan repayment shortfall.
The KPA has established itself as an effective revenue generating machine. It generated Sh. 42.7 billion in revenue in the year to June 2017, a 7.9 per cent growth over the previous year.
“KPA assets are exposed since it signed the agreement where it has been referred to us a borrower under clause 17.5, and any proceedings against its assets by the lender would not be protected since the government waived immunity on the KPA assets by signing the agreement,” the National Audit Office’s letter to the KPA management dated November 16 says.
