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Kenya, China quietly strike deal on modern railway line

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Chinese-built railway line will carry freight trains at speeds of up to 80 kilometres per hour and passenger trains at up to 120 kilometres per hour. It will be completed in five years.

Chinese-built railway line will carry freight trains at speeds of up to 80 kilometres per hour and passenger trains at up to 120 kilometres per hour. It will be completed in five years.   Nation Media Group

By JAINDI KISERO The EastAfrican

Posted  Saturday, September 22  2012 at  15:52

In Summary

  • The railway line, which is to be built according to Chinese railway design standards, will carry freight trains at speeds of up to 80 kilometres per hour, and passenger trains at up to 120 kilometres per hour.
  • It will be completed in five years, with the cost of the track alone estimated at a massive $2.6 billion.
  • Away from the limelight, the Chinese construction company — China Roads and Bridges Company — has already signed a commercial contract with the Kenya Railways Corporation, under an arrangement that commits the state-owned company to deal only with the Chinese company.
  • The new deal will have far-reaching implications for the existing concession agreed to with Rift Valley Railway in both Uganda and Kenya.
  • The new plan is that the Chinese-built railway will be operated under an arrangement known as “open access,” where multiple operators will be allowed to operate freight businesses on the standard gauge railway system in competition with RVR.
  • Kenya and Uganda could find themselves in court battling it out with RVR over access to the new railway line. Kenya has stepped up diplomatic activity to include Uganda in its dealings with the Chinese and secure support for the new railway.
  • The rate at which Kenya is building up Chinese export credit in its loan book has sparked a debate within international lending circles, questioning whether the Chinese contractor-negotiated deals could lead to an unsustainable build-up in the country’s external debt portfolio.
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Kenya has turned to China to fund the building of a new standard gauge railway line between Mombasa and Nairobi, potentially upsetting current infrastructure arrangements with its neighbours.

The railway line, which is to be built according to Chinese railway design standards, will carry freight trains at speeds of up to 80 kilometres per hour, and passenger trains at up to 120 kilometres per hour.

It will be completed in five years, with the cost of the track alone estimated at a massive $2.6 billion.

Away from the limelight, the Chinese construction company — China Roads and Bridges Company — has already signed a commercial contract with the Kenya Railways Corporation, under an arrangement that commits the state-owned company to deal only with the Chinese company.

Naturally, Uganda — one of the biggest users of the Mombasa Port — as well as Rwanda and Burundi, will be following the dealings between China and Kenya closely.

The viability of the new standard gauge railway is based on the assumption that it will be part of a seamless system connecting Kenya and Uganda, and also serving landlocked Rwanda and Burundi.

The new deal will have far-reaching implications for the existing concession agreed to with Rift Valley Railway in both Uganda and Kenya.

Under the current agreement, RVR’s interests are guaranteed by clauses that stipulate that the governments of Kenya and Uganda cannot — during the tenure of the concession — introduce changes that jeopardise RVR’s profitability.

The new plan is that the Chinese-built railway will be operated under an arrangement known as “open access,” where multiple operators will be allowed to operate freight businesses on the standard gauge railway system in competition with RVR.

Kenya and Uganda could find themselves in court battling it out with RVR over access to the new railway line.

Kenya has stepped up diplomatic activity to include Uganda in its dealings with the Chinese and secure support for the new railway. Two weeks ago, the two countries negotiated a new bilateral deal on the standard gauge railway system.

Alternative routes

Meanwhile, Tanzania and Uganda have been seeking to expedite the construction of Tanga-Musoma railway line through the Central corridor in Tanzania to link Tanga and Dar es Salaam ports.

Since Kenya’s 2007-08 post-election violence, Uganda has been trying to open a reliable southern route to the coast, to avoid the recurrence of the damage to the Uganda economy witnessed then. Kenya, the EAC partner state that is Uganda’s main transit route, goes to the polls next year.

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