State converts Sh40b debt into equity in Kenya Railways

By JAMES ANYANZWA

NAIROBI, KENYA: The Government converted its Sh40 billion debt owed by the Kenya Railways Corporation (KRC) into equity with a view of turning around the corporation’s fortunes, according to a report by the Auditor General.

The report shows that the Government paid long outstanding principle taxes and waived interest and penalties to improve the corporation’s financial position.

The Auditor General’s report on the KRC’s financial statements for the year ended June 30, 2012 shows the Government provided financial support amounting to Sh1.7 billion for the development of the railway network.

The bailout package is meant to bolster the state-owned corporation’s financial muscles in order to play a rightful role in the achievement of Kenya’s Vision 2030.

KRC chairman Gen (rtd) Jeremiah Kianga said the financial boost has now put the corporation on a sound footing for even better performance in the future.

METROPOLITAN

“The turnaround of Kenya Railways began in earnest in 2007 when a new strategic plan was put in place after the concession of railway operations to Rift Valley Railways (RVR) in 2006. Since then we have not looked back,” said Kianga. The corporation is planning to increase the rail share of freight to and from Mombasa by 30 per cent and transport 500,000 commuter passengers in metropolitan Nairobi by 2017.

Also part of KRC’s five-year strategy (2012-2017) includes providing daily rail passenger services to and from Mombasa, Kisumu and Nairobi. It also plans to construct at least 500km of standard gauge railway in the same period.

Other ambitious targets include plans to raise Sh60 billion for railway development and to invest Sh1 billion annually to develop institutional capacity and technology for the railways sector.