Auditor General denies report on Kenya losing Mombasa Port to China over debt

The Office of the Auditor General has denied reports indicating that it released an audit report warning that Kenya risks losing the port of Mombasa over the multi-billion shilling loan borrowed from China for the construction of the Standard Gauge Railway (SGR).

The said report indicated that the Auditor General Edward Ouko, wrote to the Kenya Ports Authority (KPA) Managing Director warning him that the government of China could take over the Mombasa port should the corporation fail to meet its revenue targets.

“The payment arrangement agreement substantively means that KPA’s revenue would be used to pay the Government of Kenya’s debt to China Exim bank if the minimum volumes required for consignment are not met as per schedule one,” reads part of the letter signed by F.T. Kimani for Mr. Ouko.

“Any proceedings against its assets by the lender would not be protected by sovereign immunity since the government waived the immunity on the KPA assets by signing the agreement.”

However, in a tweet on Wednesday afternoon, the Auditor General said: “Our attention has been drawn to reports that the Office of the Auditor General has released an audit report on Kenya Ports Authority’s for the Financial Year 2017/18. This is to clarify that the Office has not released any such report.”

The alleged report indicated that KPA’s revenue was Ksh.42.7 billion as at June 30, 2018, compared to Ksh.39.6 billion recorded the previous year.

It further claimed that Mr. Ouko had recommended that KPA disclose pertinent issues and risks related to the guarantee in the statements.

The report raised eyebrows considering China has taken over critical assets in other countries due to defaulted debts.

The Chinese government is reported to have taken over Sri Lanka’s Hambantota port for a lease period of 99 years for failing to show commitment in the payment of billions of dollars in loans.

Kenya owes the Exim Bank of China over Ksh.200 billion.