Kenyan president defends rail tender won by Chinese company

Tue Jan 28, 2014 11:55am EST

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NAIROBI Jan 28 (Reuters) - Kenyan President Uhuru Kenyatta has defended the tender for a multibillion-dollar railway project that was won by a Chinese company and sparked widespread criticism over the transparency of the process.

China Road and Bridge Corporation was appointed to build the first phase of Kenya's biggest ever infrastructure project, but anti-corruption watchdogs have urged Kenyatta to suspend construction while two parliamentary committees investigate the tender.

The project to link the Indian Ocean port of Mombasa with Malaba on the Ugandan border is designed to cut transport costs and boost regional trade.

Kenyan officials acknowledge that there was no public bidding, which they say was a condition of Chinese loans to help to fund construction, and some legislators have complained that the contract was overpriced.

Kenyatta, however, told journalists on Tuesday that he would not let the commercial interests of other businesses to derail infrastructure development in east Africa's biggest economy.

"The standard-gauge railway must and will go ahead for us to achieve our development agenda," Kenyatta said at a news conference, adding that those who lost fair bidding processes should "move on".

"We will not walk away from delivering to our people the infrastructure that is critical to changing lives," he said.

China has ramped up investments across east Africa, where it is helping to finance a gas pipeline in Tanzania, hydropower dams in Uganda and road and airport projects in Kenya.

Eximbank China is providing a commercial loan of $1.6 billion and a concessional loan of $1.63 billion to help to fund the first 609km of railway construction from Mombasa to capital city Nairobi, Kenyatta said.

Treasury minister Henry Rotich told the investigating committees that the portion of railway from Mombasa to Nairobi would cost 447.5 billion shillings ($5.22 billion) including financing costs.

Anti-corruption activists have said that there was no competitive bidding and have called on the government to start the tender process afresh.

The railway, which will supplement a decrepit narrow-gauge track on which derailings are frequent, will reduce freight costs to 8 U.S. cents per tonne per kilometre from the present average of 20 U.S. cents, Kenyatta said.

The new line will ferry heavier and bigger containers more quickly and will relieve pressure on the region's congested roads, increasing east Africa's competitiveness as an investment destination. ($1 = 85.8000 Kenyan shillings) (Reporting by George Obulutsa and Richard Lough; Editing by David Goodman)

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