Mon, May 12, 2014 - Page 1 News List

China and Africa sign multibillion-dollar rail deal

Reuters, NAIROBI

Chinese Prime Minister Li Keqiang, center, Kenyan President Uhuru Kenyatta, center-right, and their delegations arrive for a joint news conference at the Ivory burning site of the Nairobi National Park, in Nairobi, Kenya, on Saturday.

Photo: EPA

East African leaders and China yesterday formally signed agreements for the construction of a new multibillion-dollar railway linking the Kenyan port of Mombasa to Nairobi and running on to neighboring states.

The deals were signed in Nairobi on the last stage of an Africa tour by Chinese Premier Li Keqiang (李克強), although Kenyan President Uhuru Kenyatta had already signed up to the deal during his state visit to Beijing last year.

“The costs of moving our people and our goods ... across our borders will fall sharply,” Kenyatta told a news conference with the Chinese and African leaders yesterday.

The new standard gauge line will supplement a slower narrow gauge network that now only runs to Uganda, whereas the new line is designed to go on to Rwanda and South Sudan, part of an effort to cut the hefty costs of trade between east African nations, which mainly rely on poor roads and the rickety narrow gauge line built in the 19th century.

Kenyatta has previously said the new railway will cut freight costs to US$0.08 a tonne per kilometer from US$0.20 now.

China Road and Bridge Corp, a subsidiary of China Communications Construction Co, has been appointed to construct the initial Kenyan leg of the line, despite widespread criticism that there was no competitive tendering for the work.

Kenyan officials said there was no public bidding because that was a condition of securing Chinese financing, but some lawmakers said the deal was overpriced.

Officials previously put the price for the railway from Mombasa to Kenya’s western border with Uganda at 447.5 billion shillings (US$5 billion), including financing costs.

China has won friends in Africa by building infrastructure across the continent, but critics grumble that it often relies on Chinese labor and is more keen on sucking in African raw materials than passing on skills.

Li told the news conference yesterday that the rail construction company would ensure African workers were trained and laws adhered to.

Meanwhile Kenya signed two financing deals on Saturday with China’s Eximbank, although no value was given.

Officials previously said China was offering a US$1.6 billion commercial loan and a US$1.63 billion concessional facility for the Mombasa to Nairobi section — covering 85 percent of that section’s estimated US$3.8 billion cost.

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