Kenyan appellate court rules $3.2 billion Chinese contract with Kenya railways 'illegal'

A Kenyan appellate court has passed a judgment against the USD 3.2 billion Standard Gauge Railway (SGR) project between Kenya government and the China Road and Bridge Corporation (CRBC), calling the contract as illegal.

Kenyan activist Okiya Omtatah and the Law Society of Kenya, an association of practising advocates, filed a petition in 2014 against the bidding process of the contract and tried to halt the construction. The petitioners said the project was not put up for tender and bidding process was not duly followed despite it being a government contract, the cost of which would be borne by the Kenyan taxpayers.

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However, when the trial was in the High Court, the judges were convinced that the government documents presented by the complainants to support their claim, which the government described as classified, were obtained illegally. Hence the High Court had expunged the documents from court records and dismissed the case, South China Morning Post (SCMP) reported.

The complainant then filed a fresh appeal in the Court of Appeals which handles the cases arising from the High Court's decisions in Kenya. The Court of Appeals or the Appellate Court observed that state-run Kenya Railways had failed to comply with and violated the country's law "in the procurement" of the multibillion-dollar Chinese-funded project under the Belt and Road Initiative (BRI), according to SCMP.

The court of appeals has passed a judgment in favour of the complainant even as the projects have been completed and operational since 2017. What will transpire next is unclear as to whether the Kenyan Government will challenge the ruling of the appellate court or seek its interpretation in the Supreme Court. Both CRBC and Kenya Railways defended the agreement, saying that the Kenyan government had negotiated a financing deal with Exim Bank of China for two loans, each amounting to USD 1.6 billion, to support the two SGR projects, which have been completed and are being used for passenger and cargo services.

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The government which is in shambles due to the COVID-19 pandemic has also been under pressure to pay the Chinese debt hence it is now pressing the importers to use the cargo services of the railways for transporting the goods. This has not gone down well with the importers and truckers as they opine the transport through railways is more expensive than the trucks.

The Africa Star Railway Operation Company, a subsidiary of CRBC manages the operations of both passenger and cargo trains on the SGR. The Kenyan parliament has maintained that Kenya railway is yet to pay the management fees of USD 380 million to Africa Star Railway. This seemingly forms a part of the pattern of debt-trap diplomacy followed by China under the BRI wherein the Chinese first lend large monies to developing nations under the garb of development and burden the host nations with debts, ultimately acquiring the assets as a means of repayment.

(With ANI inputs)