NAIROBI, Kenya — Kenya will rely on toll fees collected by a consortium of Chinese companies to help finance and operate a crucial railway extension to its border with Uganda, the government announced. The innovative funding structure will allow the revival of the stalled Standard Gauge Railway (SGR) project.
Finance Minister John Mbadi told the National Assembly that the Chinese consortium will contribute 40% of the $5.3 billion needed for the 475-kilometer (295-mile) line from Naivasha to Malaba. In exchange, the unnamed companies will operate the railway for a negotiated period, recouping their investment through toll charges levied on users.
The Export-Import Bank of China (China Exim Bank), which funded the initial phase of the SGR, is expected to provide another 30% of the financing through loans, Mbadi said. The previous extension was halted in 2019 when the China Exim Bank called for a new commercial viability study.
Mbadi explained that the new loan agreement includes a grace period until after 2029, by which time Kenya anticipates having paid off the majority of its existing SGR loan. The remaining 30% of the construction costs will be covered by the Kenyan government through a railway development levy or its securitization.
The Chinese ambassador to Kenya, Guo Haiyan, had earlier affirmed China’s commitment to supporting Kenya’s development agenda, particularly the railway extension.
Analysts suggest the completed railway could eventually extend to the mineral-rich Democratic Republic of Congo, offering significant economic opportunities.
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