Kenya gets Sh153b loan to extend railway

Construction labourers work at a landscaping section of the Mombasa-Nairobi standard gauge railway (SGR) near Emali in Kenya October 10, 2015. (Photo: Reuters)

The Government has secured Sh153 billion ($1.5 billion) loan from China to extend its railway from Nairobi to Naivasha, State House spokesperson Manoah Esipisu announced Sunday.

The faster railway being built from the Indian Ocean Port of Mombasa is expected to reach Nairobi next year and open up to commercial services in mid-2017.

The Chinese-financed project is the first stage in a scheme that aims to extend to Uganda and other land-locked countries.

The goal is to cut the cost of transport and boost trade, by replacing a slower, narrow-gauge line.

Esipisu said the extension to Naivasha will offer access to an industrial park to be built there to accommodate manufacturing firms wishing to use power from the nearby geothermal steam fields that are being developed.

“Kenya and China signed a financing package for the extension. China Eximbank will provide a $1.5 billion (Sh153 billion) loan, 85 per cent of the financing, while Kenya will provide the balance,” he told a news conference.

The deal was signed on the sidelines of the Forum for China-Africa Co-operation, which was held in Johannesburg.

Kenya Railways and China Communications Construction Company Ltd have also signed a deal to carry out feasibility studies and initial designs for the second leg of the Mombasa-Nairobi line, which will stretch to Malaba on Kenya’s border with Uganda.

“The Standard Gauge Railway remains the single largest investment in Kenya’s economy in the last five decades,” Esipisu said.

Kenya has also signed or is close to concluding various deals with China for the expansion of the electricity grid, he said.