The Chinese government has refuted reports claiming that it may take over Mombasa port if Kenya fails to service loan taken from China Exim Bank for construction of Standard Gauge Railway (SGR).
In a statement, China's Foreign Ministry spokeswoman Hua Chunying has termed as false reports that the Kenyan government used Mombasa port as collateral for the loan.
“We have checked with the relevant Chinese financial institution and found that the allegation that the Kenyan government used the Mombasa port as collateral in its payment agreement for Nairobi-Mombasa railway is not true,” Ms. Chunying states.
China further says that the project is progressing smoothly and expressed confidence that the Nairobi-Mombasa SGR line is feasible.
Chunying also says it is almost impossible for African countries to be overburdened with Chinese loans since feasibility studies are carried out before projects are implemented.
“When cooperating with African countries including Kenya, Chinese companies and financial institutions will always conduct a joint and thorough scientific study on the feasibility of the projects and then proceed to determine construction and funding plans and scales to guard against causing debt risks and financial burdens for Africa.”
Last week, a report purportedly authored by Auditor-General Edward Ouko sent the country into fear after claiming that China is poised to seize the Mombasa port if Kenya defaults on the multi-billion-shilling loan.
"The payment arrangement agreement substantively means that the Authority's revenue would be used to pay the Government of Kenya's debt to China Exim Bank if minimum volumes required for consignment are not met as per schedule one."
"The China Exim bank would become a principal in over KPA if KPC defaults in its obligations and China Exim bank exercise power over the escrow account security," the said report reads in part.
The Office of the Auditor-General has since disowned the report, saying it wasn't compiled by Ouko.
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