National Treasury cabinet secretary Mr Henry Rotich says the funds, which will be channelled through Kenya Railways Corporation, are "to facilitate the speedy implementation of the project." Rotich says $US 1.2bn is part of a loan from China while $US 264.6m comes from the government's Railway Development Levy Fund.
The $US 3.6bn railway is being constructed by China Road and Bridge Corporation with 90% financing from Exim Bank of China.
Despite a couple of brief suspensions of construction in October 2014 and April this year, Rotich says work is progressing well: "Construction is ahead of schedule and is expected to be completed around mid-2017.
Construction of the an additional 2326km from Nairobi via Malaba, Kenya, and Kampala, Uganda, to the Rwandan capital of Kigali will cost $US 13.4bn.
"We are doing studies for phase two of the standard-gauge railway from Nairobi to Malaba and we will finalise and present it to partner states by July," says Rotich. Uganda and Rwanda are doing separate studies of their sections of the new railway. The presidents of the three countries have asked their transport and finance ministers to accelerate plans for a joint mission to China to discuss the possibility of Chinese funding for the project.