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China, East African leaders sign up for new rail link

12 May 2014, 09:32

Nairobi - East African leaders and China formally signed agreements on Sunday for the construction of a new multi-billion dollar railway linking the Kenyan port of Mombasa to Nairobi and running on to neighbouring states.

The deals were signed in Nairobi on the last stage of an Africa tour by Chinese Premier Li Keqiang, although 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 on Sunday.

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 8 U.S. cents a tonne per km from 20 cents now.

China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, has been appointed to construct the initial Kenyan leg of the new 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 ($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 labour and is more keen on sucking in African raw materials than passing on skills.

China's premier told the news conference on Sunday 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 $1.6 billion commercial loan and a $1.63 billion concessional facility for the Mombasa to Nairobi section - covering 85 percent of that section's estimated 327 billion shilling ($3.8 billion) cost.

 - Reuters


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