A report by the Auditor-General Edward Ouko has warned that the Kenyan government risks losing the Port of Mombasa to the Chinese government.
Under President Uhuru Kenyatta's watch, Kenya through the Kenya Railways Corporation (KRC) borrowed Sh227 billion from the Exim Bank of China to construct the Mombasa-Nairobi Standard Gauge Railway (SGR).
According to Ouko, if Kenya defaults paying the loan, the Mombasa port, the source of economy not only for Coastal population but of East Africa region as well, will be taken away.
This is because the repayment agreement says the revenue from the Kenya Ports Authority (KPA) would be used to clear the debt.
Read: Kenyans duped on Standard Gauge Railway - The Economist
Also Read: Revealed: Why Joho's deputy is opposed to SGR
Ouko said the agreement is biased since any non-performance or dispute with the bank would be referred to arbitration in China where fairness is resolving the disagreement may not be guaranteed.
"Exim Bank would become a principal over KPA if KRC defaults in its obligations and the Chinese bank exercises power over the escrow account security,” read a management letter sent to KPA, signed by FT Kimani on behalf of Ouko.
KPA’s revenue was Sh42.7 billion as at June 30, 2018, a 7.9 percent increase from the Sh39.6 billion recorded the previous year, the audit report seen by Nation, disclosed.
The Auditor General put KPA on the spot, saying the authority has failed to disclose guarantee documents in its financial statements.
However, through its Twitter account, the Office of the Auditor-General neither confirmed nor denied contents in the 'leaked' report.
“Our attention has been drawn to reports that @OAG Kenya has released an audit report on @Kenya Ports for FY 2017/18. This is to clarify that the office has not released any such report,” the tweet read.
A source at the auditor-general’s office, told the daily that the issues raised were being investigated.
“The issues raised are not conclusive. They are a work in progress and will be dropped if they don’t respond satisfactorily."
Read: Update on construction of SGR's Port Relief Line
In September 2018, Zambia lost its international airport to China over unpaid debt while the Sri Lankan government lost its Hambantota port to China for a lease period of 99 years after failing to show commitment in repayment of a loan amounting to billions of dollars in December 2017.
Kenya is currently constructing the second phase of the SGR using a loan.