China Eximbank provides $1.39 billion buyer’s credit loan for Phase 2A of the Standard Gauge Railway Project (Linked to Record ID#37103, #31777)

📋 Staff Comments

1. This project is also known as the Development of Nairobi to Naivasha Standard Gauge Railway Project and the Nairobi-Malaba Railway Project. The Chinese project title is 肯尼亚内罗毕至马拉巴铁路项目.
2. Record ID#37103 and ID#31777 capture the China Eximbank loans for Phase 1 of the Standard Gauge Railway Project. The other phases of this project include Phase 2B (262 km) from Naivasha to Narok to Bomet to Nyamira (which includes a new Kisumu Port) and Phase 2C (107 km) from Kisumu to Yala to Mumias to Malaba.
3. For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
4. The Kenya Electronic Project Management Information System (e-ProMIS) identification and reference numbers for this project are 2014/055202 and CHINA-001, respectively.
5. The loan identification number in the National Treasury’s public debt register is 2015023 (or 2015023_1).
6. The 2015 China Eximbank buyer’s credit loan for the Nairobi-Naivasha Section of the SGR Project can be accessed in its entirety via https://www.dropbox.com/s/0vhgyylakdrfgac/SGR%20BCL%202015%20Published%20Online%20by%20Government%20of%20Kenya.pdf?dl=0 and https://www.dropbox.com/s/zy6zgzk8cufl6z7/SGR%20BCL%202015.pdf?dl=0. The 2014 China Eximbank buyer’s credit loan for the Mombasa-Nairobi Section of the SGR Project can be accessed in its entirety via https://www.dropbox.com/s/5j3alwun2tv8wk2/SGR%20BCL%202014.pdf?dl=0 and https://www.dropbox.com/s/m98rfi886dl3jjd/SGR%20BCL%202014%20Published%20by%20Government%20of%20Kenya.pdf?dl=0. The 2014 China Eximbank preferential buyer’s credit for the Mombasa-Nairobi Section of the SGR Project can be accessed in its entirety via https://www.dropbox.com/s/4r65hnvegvqwzao/SGR%20PBC%202014.pdf?dl=0 and https://www.dropbox.com/s/6ejzkjhjc8yr7cn/SGR%20PBC%202014%20Loan%20Contract%20Published%20by%20Government%20of%20Kenya.pdf?dl=0. The escrow agreement for the Mombasa-Nairobi Section of the SGR Project can be accessed in its entirety via https://www.dropbox.com/s/sseiuktq7zdoim7/SGR%20Escrow%20Agreement.pdf?dl=0.
7. According to Section 12.2 (the ‘Credit Enhancement Arrangement’ Section) of the December 3, 2015 BCL agreement, “[t]he Borrower undertakes and agrees with the Lender that throughout the continuance of this Agreement and so long as the Loan or any other sum remains outstanding, the repayment of principal and payment of interest and fees under this Agreement shall be credit enhanced and secured by the Security Documents (if any) and other relevant arrangements, including without limitation the [Railway Development Fund] which will be applied in priority to repay all loans drawn under this Agreement for the Project. The detailed arrangement of the credit enhancement and security arrangements (if any) will be set out by the Borrower, the Lender and other relevant parties under the relevant Security Documents. The Borrowers shall ensure that the relevant parties will perform their obligations under the relevant Security Documents. The Lender shall be entitled to examine and supervise the execution and performance of the Security Documents. Notwithstanding the existing of the Security Documents, the Borrower shall be fully liable for the payment and repayment obligations under this Agreement. The Borrower’s obligations under this Agreement shall not be affected or undermined by the relevant parties of such Security Documents and the On-Lending Agreement. '8. The December 3, 2015 BCL agreement defines “On-Lending Agreement” as the “loan agreement entered into between the Borrower [The Government of the Republic of Kenya (represented by the National Treasury of the Republic of Kenya)] and the End-User, whereby the Facility is on-lent by the Borrower to the End-User [Kenya Railways Corporation] to implement the Project.
8. According to page 2 of the September 30, 2014 take-or-pay agreement (the ‘Delivery and Movement of Freight to the Embakasi Container Depot’ agreement), ‘the repayment of the principal and payment of interest and fees of the loans are to be secured, inter alia, by a long term service agreement with an aim of guaranteeing a minimum amount of freight throughout the term of the agreements to be charged and received by the operator of the project, which shall be used to secure the repayment of principal and interest.
9. King & Wood Mallesons Beijing Office served as Chinese Counsel to the Lender. Mboya Wangong’u & Waiyaki Advocates served as Kenyan Counsel to the Lender.
10. The amounts outstanding and repayments data are drawn from the Kenyan Treasury’s External Public Debt Register. See https://www.dropbox.com/s/549ixt2gj1jbjvi/External-Public-Debt-Register-as-at-End-June-2022.pdf?dl=0 and https://www.dropbox.com/s/0et4jg1qfg1bo7r/External-Public-Debt-Register-as-at-End-June-2021.pdf?dl=0 and https://www.dropbox.com/s/233j706743q7f1g/External-Public-Debt-Register-as-at-End-June-2020.pdf?dl=0 and https://www.dropbox.com/s/qkoybr9ja0ohemy/External-Public-Debt-Register-as-at-End-June-2009.pdf?dl=0 and https://www.dropbox.com/s/thy3s6ggjcjd97z/External-Public-Debt-Register-as-at-End-June-2012.pdf?dl=0 and https://www.dropbox.com/s/fzbfq01vas6m0i9/External-Public-Debt-Register-as-at-End-June-2019.pdf?dl=0 and https://www.dropbox.com/s/ennrl6d4zd2nizs/External-Public-Debt-Register-as-at-End-June-2018.pdf?dl=0 and https://www.dropbox.com/s/8ibazrj1a8oho2d/External-Public-Debt-Register-as-at-End-June-2017.pdf?dl=0 and https://www.dropbox.com/s/wdbjl0wq49i09x1/External-Public-Debt-Register-as-at-End-June-2015.pdf?dl=0

📚 Sources & References

• African politics meets Chinese engineers: The Chinese-built Standard Gauge Railway Project in Kenya and East Africa
• Ambassador Liu Xianfa inspects the construction site of the first phase of the Nei-Malaysia Railway
• Ambassador Liu Xianfa of Kenya accompanied President Kenyatta to attend the signing ceremony of the commercial contract for the Nairobi-Navasa railway project
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• Chinese bank cuts Sh32bn SGR funds
• Chinese Contractor Starts Kenyan Nairobi-Malaba Railway Project in Full Swing
• Debt pain as payment of Sh162bn Naivasha SGR loan starts
• DEVELOPMENT OF NAIROBI TO NAIVASHA STANDARD GAUGE RAILWAY
• External-Public-Debt-Register-as-at-End-June-2020.pdf
• How Africa Borrows From China: And Why Mombasa Port is Not Collateral for Kenya's Standard Gauge Railway
• IJGlobal - Kenya Standard Gauge Railway Phase 2A …KM) - Kenya
• IN THE HIGH COURT OF KENYA AT MOMBASA CONSTITUTIONAL & JUDICIAL R EVIEW DIVISION CONSTITUTIONAL PETITION NO. E 032 OF 20 2
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• Kenya
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• Kenya
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• Kenya’s expensive Chinese-built railway is racking up losses even as loans come due
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• Rotich seeks MPs okay for Sh50bn Naivasha SGR line
• Rugged terrain between Nairobi and Naivasha doubles cost of SGR
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• ASSETS
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• Weekly Review Issue No 8
• 中 国 信 保 承 保 的 内 ⻢ 铁 路 一 期 项 目 全 线 顺 利 贯 通
• 中企承建的肯尼亚内马铁路一期通车
• 肯媒展望内马铁路将带动沿线发展
• 行业趋势分析-中国的参与有利于苏丹跨境铁路项目的发展 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.