Kenya’s contract for China-funded railways is an ‘illegal’ rule

Kenya’s contract for China-funded railways is an ‘illegal’ rule


When China's President Xi Jinping hosted African leaders at last week's Sino-Africa summit, Kenya's Standard Gauge Railway asked for a multi-billion dollar Chinese-funded belt to help move freight during the coronary epidemic. The End Road Initiative Project was sung.


Xi congratulated Kenya's President Uhuru Kenyatta on the cargo handling of the Standard Gauge Railway (SGR), which operates for the first time in 2017 from the port of Mombasa on the Kenyan coast in East Africa's Hinterland. In the Kenyan decision, 19 helped to maintain trade flows in the region despite freight restrictions by COVID- eration measures.

But the rail project has been hit one after another, and the latest has major implications on its future and other projects. The Kenya Appellate Court on Friday announced that the rail contract between Kenya and China Road and Bridge Corporation (CRBC) is invalid.

The Court of Appeal, which handled the cases triggered by the Kenyan High Court's ruling, ruled that the state-owned Kenyan Railway had "failed to procure the SGR project" and violated "the laws of the country".

Kenya activist Okiya Omta and lawyers' association Law Society of Kenya auctioned in 2014 to stop the creation of the SGR. He argued that the railway is a public project and that it should be subject to fair, competitive and transparent procurement.

Instead, Kenyan taxpayers face the burden of repaying the debt, but the contract is single-sourced without paying the tender.

The High Court dismissed the case and ordered the plaintiffs' documents to support their case, including contract and other negotiating documents, which the government categorized as "illegally obtained and had to be extracted from court records." The plaintiffs were dissatisfied with the decision.

Kenya Railways and CRBC have upheld the deal, stating that the Kenyan government has entered into a $ 1.6 billion deal for two loans with the Exim Bank of China in support of the SGR project.

But the decision of the Court of Appeal in favor of the lawyers comes after the main part of the project is completed and operationalized. While it is not clear what will happen next, it is possible for the Kenyan government or the CRBC to challenge the decision of the Court of Appeal or take its interpretation to the Supreme Court.

However, legal experts said Friday's decision could have future implications as both the government and the CRBC are exempt from meeting contractual obligations.

Law Society President Nelson Heavey suggested that an appeal court ruling could provide an excuse for the Kenyan government to waive its responsibility for the project. Howie posted on Twitter, "This is the initial process by which the Goke (Kenyan Government) is seeking international arbitration if China Road & Bridge Corporation sues."

Gad Ouma Ma, a commercial lawyer, and managing partner at Nairobi-based law firm GM. Gamma Advocates described the ruling as a basis that the government could use as a basis for getting out of its obligations in the contract "but this is not easy.

Oma said that for the completed project if there is a dispute, the government is responsible for carrying out its obligations under the agreement. "It is very difficult to say that it is out of the contract because the government is not responsible at this time."

He said there would be a CRBC case regarding the validity of the appellate court decision. "Where the party is likely to steal from the back door, it is possible to protect the vulnerable side of the court or any international arbitration agency," Oma said, adding that such agreements always contain applicable law or disputes. Policies.

In 2014, CRBC was awarded a $ 3.2 billion contract for the construction of a railway line from Embikasa to Kenya's capital, Nairobi. Its parent company, China Communications Construction Company, later expanded another US $ 1.5 billion from Nairobi to Nairobi in the Central Rift Valley.

Both projects were completed with the operation of passenger and cargo trains, and in 2017 the CRBC subsidiary, the African Star Railway Operations Company, was awarded a contract to manage the passenger and cargo trains at SGRR.

Kenya has planned to extend the railway to Uganda on the western border of Malaba, but the Exim Bank of China, which financed the first two phases, urged Kenya to repeat the feasibility study to expand Malaya. .

The Embassy of China in Nairobi said, "China Exim Bank is currently conducting a feasibility study on the railway that extends to the west."

Amid pressure to repay its debt amid a coronavirus epidemic that has devastated the economy, the Kenyan government is forcing importers to use the train. But trucks and importers have protested that using a train is more expensive than trucks.

Last year, SGR generated US $ 136 million in revenue from cargo and passenger services. But earlier this month, the Kenyan Parliament revealed that the Kenya Railway did not pay a $ 380 million operating fee to Africa Star Railways. The Chinese embassy in Nairobi confirmed that it did not pay a portion of the fees to the African Star Railway, but "praised the Kenyan government's efforts to end pending payments".


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