Kenya could lose control of her port assets in case she defaults her loans from the Chinese government and Chinese Exim Bank.
This was revealed by the government’s Auditor General Edward Ouko who says that the government used the Kenya Ports Authority assets as security to secure loans, but kept it under wraps in their financial statement.
In his latest report, Ouko says that the “China Exim bank would become a principle over KPA if Kenya Railways Commission defaults in its obligations and China Exim Bank exercise power over the escrow account security.”
“The KPA assets are exposed since in the Authority signed the agreement where it has been referred to as a borrower under clause 17.5 and any proceeding against its assets by the lender would not be protected by sovereign immunity since the government waived the immunity on the Kenya Ports Assets by signing the agreement,” says the auditor general.
He further says that the agreement is biased since any non-performance or dispute with the China Exim bank (lender) would be referred to arbitration in China, whose fairness in resolving the disagreement may not be guaranteed.
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The Kenya Ports Authority currently has an operating revenue of Ksh42.7 billion, an increase of Ksh3.1 billion (7.9 per cent) last year, when the authority had operating revenues of Ksh39.6.
As of March 2018, the country’s external debt as at March 31, 2018 was Sh2.51 trillion made up of; Sh832.22 billion multinational debt, Sh799.19 billion commercial debt, Sh741.04 billion bilateral debt and Sh140.04 billion guaranteed debt.
China’s share of Kenya’s external debt is, therefore, Sh534.07 billion of Sh2.51 trillion which translates to 21.3 per cent of Kenya’s external public debt