Treasury Cabinet Secretary, Ukur Yatani, has denied reports that the Mombasa Port is at risk of takeover by China over defaulting loans.
In a statement on Monday, Yatani said that the port had no adverse exposure to any lender or category of lenders in existing loan agreements.
Absolutely no risk
“There is absolutely no risk of China or any other country to take over the port of Mombasa,” The CS said.
The CS said that external loans from bi-lateral lenders had a pari passu provision which calls for equal treatment in servicing of all debts.
Thus, the government could not pledge public assets as security to the debt on one lender and not another. He said such an action would violate the provisions made in existing loan agreements with other bilateral lenders.
He also assured that Kenya was set to continue honouring its debt servicing obligations to attract creditors, promote growth and development to Kenyans.
Through the National Treasury, he said the government was paying the SGR loan according to the loan agreement provisions and the Public Finance Management Act.
Auditor-General report on Port
Ukur Yattani was responding to a story that The Star had published, which was based on a report by the Auditor-General.
The AG had reported that the port of Mombasa could be under Chinese control if the government were to default its sh 364 billion Standard Gauge Railway loan. Assets of Kenya Ports Authority were placed as collateral for the SGR.
“KPA assets are exposed to the risk of a takeover since the authority signed the payment arrangement agreement,” The AG said, an agreement that waived KPA and Kenya Railways’ immunity from legal proceedings if they defaulted on servicing the loan.
— TheStarKenya (@TheStarKenya) March 15, 2021
It is not the first time that news state that the Mombasa Port is a risk if Kenya defaults on the SGR loan. Reports about the port being collateral have been circulating since the building of the SGR. And for the fourth year running, the SGR has failed to break even, with operations cost far outweighing the income generated.