President William Ruto is actively seeking private-public partnerships with Chinese companies amid growing fears that some of the uncompleted Chinese-funded infrastructure projects, including the standard gauge railway, could turn into white elephants.
Dr Ruto’s visit comes against the backdrop of a renewed government quest to deepen trade and economic relations with the Far East powerhouse.
On Monday, President Ruto oversaw the signing of a memorandum of understanding with two Chinese entities; China Energy International Group and telecommunications giant Huawei.
During the tour, the President wooed Chinese firms to take advantage of opportunities presented by Kenya’s energy and information and communication technology sectors.
“Kenya is a great champion of renewable energy and that is why our grid is almost 93 per cent renewable and that is a deliberate decision made. I’m very happy you have technology that can work with us for leverage on our renewable assets," President Ruto told Chinese Investors.
"We want to persuade you and your company to look at opportunities of working with us as the government of Kenya to unlock opportunities in the energy sector as part of enhancing the energy pool not just in Kenya but also in our region.”
The three-day trip to China is also expected to include discussions on unlocking new financing for infrastructure projects including roads, with China having largely paused new funding to Kenya in recent years following the completion of the second phase of the multibillion-shilling standard gauge railway project. But the details of the deals remained scanty as his entourage remained tight lipped.
Last week, Deputy President Rigathi Gachagua indicated that the President would seek new funding to complete stalled road projects.
Nation could not, however, immediately confirm whether discussions on the new credit line would form part of the discussions during the President’s visit.
The agreement with China Energy International Group entails optimising the electrical power system, modernising power generation, transmission and distribution lines and substations.
The deal also covers utilising and unlocking the potential of renewable energy and advanced energy storage.
Huawei’s deal meanwhile sets the stage for collaboration on the development of information and communication technology infrastructure in Kenya and the promotion of digitisation across sectors.
Public-private partnerships relate to agreements between public and private sector entities where the typical deal is deployed in the provision of a public asset or service.
The implementation of public private partnerships in Kenya lies with the Public Private Partnerships (PPP) Directorate, which sits at the National Treasury and is tasked partly with originating, guiding and coordinating the selection, ranking and prioritisation of public private partnership projects within the public budget framework.
As of September 2021, the Directorate had approved seven PPP projects in the energy and road sectors including the Sh99.6 billion (Sh667.8 million) Nairobi Expressway Project.
The seven PPP approved projects have a total value of Sh181.6 billion ($1.2 billion) and are largely funded by a debt-equity mix. President Ruto is also seeking to improve Kenya’s balance of payments with China by increasing fresh-produce exports.
“We continue to look for opportunities to even trade between the two countries by exploring possibilities for exports from Kenya whether it’s our avocados, tea and macadamia. We are exploring possibilities in the sectors of livestock, both beef and leather products,” President Ruto added.
Data from the Kenya National Bureau of Statistics show that China enjoys the balance of trade with imports into Kenya standing at Sh452.6 billion in 2022 against exports of Sh27.5 billion. Despite easing its financing, Kenya owed China Sh804.8 billion in debts as at the end of June last year making it the country’s leading bilateral creditor.
Most of the debt owed to China relates to projects under the Road and Bridge initiative and includes financing to the Nairobi Eastern and Northern Bypass Project, the Nairobi Southern Bypass, the Mombasa-Nairobi Standard Gauge Railway Project and the Nairobi-Naivasha Standard Gauge Railway Project.
