By James Anyanzwa

The State-owned Kenya Railways Corporation (KRC) says it made a profit of Sh1.2 billion for the financial year ended December 31,2011

This is compared to a loss of Sh2.1 billion in the previous year.

In a statement yesterday, Chairman General (Rtd) Jeremiah Kianga said the corporation’s turnaround began in 2007 after the adoption of a new strategic plan.  “Since then the Corporation has never looked back,” he said.

“The improved performance therefore is really a factor of strict adherence to business principles and the support of the Government.”

The Corporation attributed the remarkable performance to lean workforce, robust ICT system and the rebranding exercise that began in 2010.

KRC did not however, elaborate about the key drivers of the profitability that is highlighted in unaudited accounts for full year ending December 31, 2011.  In 2008, KRC engaged an accountancy and management consultant firm, to undertake a restructuring study to ascertain the financial health of the corporation.

The audit revealed that the Corporation was technically insolvent with a negative asset value of Sh 8 billion. In addition, KRC was found to be indebted to a tune of  Sh 72.8 billion, owed to its staff pension scheme, tax liabilities, and loans guaranteed by the Government.

During the period the corporation transferred assets worth Sh12.1 billion to its Staff Retirement Benefits Scheme while the Government converted its Sh40.1 billion worth of loan into equity. KRC’s assets included buildings and parcels of land with some of the property located in Muthurwa, Makongeni, Landi Mawe, and Ngara.

The Corporation’s net assets improved from a negative Sh 7.5 billion to a net worth of Sh 46 billion. Following decades of loss making, restructuring plans for the KRC were initiated in October 2006. 

The railway freight services were conceded to the Rift Valley Railways Ltd from November 1, 2006, for 25 years for freight services and five years for passenger services. The Act was amended in 2005 to make it possible for the Board  to enter into concession agreements or other forms of management for the provision of rail transport services.

Following this Amendment, KRC conceded railway operations to Rift Valley Railways Ltd.