The Standard Gauge Railway is not directly run by China Road and Bridge Corporation (CRBC), a State-owned Chinese company with Kenyan offices, as agreed in the initial contract, media reports have indicated.
It is alleged that operations of the SGR are run through a “special purpose operating company” formed in May 2017, Africa Star Railway Operation Company.
According to reports by the Sunday Nation, the company is majority-owned by CRBC, but the other shareholders remain a mystery with details unavailable at the Registrar of Companies in Nairobi.
Read: Raila Responsible For China’s Refusal To Loan Kenya Sh368 Billion For SGR – MP Waluke Alleges
The company is now demanding a whooping Ksh30 billion from Kenya Railway, which it terms as ‘pending payments’ and a penalty of Ksh800 million for late payments.
“Before the operations started, documents show, Kenya was compelled to lend the operator an interest free Sh3.5 billion, according to the documents. A special reserve account was also set up to be maintained with Sh3 billion to cushion the operator. The contract also put punitive clauses pushing Kenya to start operating the railway by June 1, 2017. Any delay in starting the line would attract a fine of Sh24.2 million a day, the contract shows,” reports Nation.
The first six months of operation were to earn the company Ksh13.3 billion for the passenger service trains.
Read: SGR Noise Disturbance To Cost Gov’t Ksh467 Million For Relocation Of School, Hospital
The contract is said to have been orchestrated by top government officials and former Kenya Railways managing director Atanas Maina, who was suspended over corruption allegations.
Under the confidential contract, the operator has the right to manage the ticketing system and any associated software and hardware.
The operator also collects passenger fares, including non-cash revenues like M-Pesa.
In what looks like an exploitation move, the secret contract shows that the operator can only cater for repair bills of less than Ksh100,000. Line maintenance bills also should not exceed Ksh5 million per year.
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