Kenya Standard Gauge Railway contracts: What released documents say, and what they don't

A media frenzy has erupted in Kenya over the November 5, 2022 release of three Chinese loan contracts signed between the Kenyan government and China Export Import Bank, to finance two phases of Kenya's Standard Gauge Railway. The release of the three contracts by Kenya's new Transport and Infrastructure minister came nearly four years after rumours began circulating that Kenya had staked its valuable Mombasa Port as collateral for the initial US$3.6 billion railway project loans. The recently released loan contracts confirm that the "The Republic of Kenya, represented by the National Treasury of Kenya" is the Borrower, and is "Fully liable for the payment and repayment obligations" of the loan contracts. The contracts state that this obligation remains, whether or not Kenya Railways Corporation and Kenya Ports Authority perform their own obligations. We also analysed the "Take or Pay Agreement" signed between Kenya Railway Corporation and Kenya Ports Authority. In that agreement, a copy of which was shared with us by colleagues in Kenya, Kenya Ports Authority had committed to ship a set amount of cargo on the railway each month or pay the shortfall to the Kenya Railway Corporation. Kenya's SGR credit enhancements were carefully and creatively designed to enhance the bankability of a railway project that has significantly upgraded the Kenya Ports Authority's competitive position in the region.