How SGR could be a bane to economy of Coast counties
SEE ALSO :Msichojua kati ya Joho na Aisha“How can KPA compel owners of goods to use railways services?” poses the report which concludes that cargo belongs to the consignee or importer, not the government. The report shows that the port cannot operate properly, reduce delays and congestion and foster efficiency without the support of CFSs, citing the experience of India and Nigeria. The 20 CFSs in Mombasa have invested Sh12.5 billion, according to the report which shows 800 trucks leave these stations daily. The CFSA report opposes the “take or pay” agreement between the Chinese lenders and government for cargo at the port. This agreement compels Kenya Railway Corporation (KRC), which manages SGR, to guarantee an optimum volume of cargo on the new railroad to enable it recoup costs of its building. As a consequence, Mombasa’s economy, which is based on logistics, is experiencing a crunch. The report says government’s favours to the SGR at the expense of other transporters amounts to unfair trade practice. These favours include concessionary rates for SGR users and indirect orders to importers to use SGRwhen goods land at the port. “KPA is required to guarantee Kenya Railways that it will provide a minimum consignment of freight. Would this be subjecting importers and other transporters to an undue disadvantage whilst giving KRC an undue preference?” poses the report which says the Act allows the state to impose a monopoly of the nature enjoyed by SGR on “exceptional” circumstances of national security.
SEE ALSO :Joho ally survives ouster motion“One interesting observation is that it appears that the feasibility study undertaken in 2011 by China Road and Bridges Corporation (CRBC) and veneered in 2012 is the only study on the SGR available,” says the report. Cargo volumes The focus of competition for cargo is based on the more than 26 million metric tonnes annually handled by the port where government has a say. CFSA Chief Executive Officer Daniel Nzeki says 50 per cent of CFSs workers -- translating to 3,000 -- have been laid off following the impact of both the expansion of the port and the introduction of SGR. “The workers rendered redundant are mainly from Mombasa due the significant reduction in cargo volumes to the CFSs,” Nzeki said. A reliable source at the Kenya Railways said SGRcontainer freight trains have hauled 1.5 million metric tonnes between January and August. The number of trains have increased to seven per day. SGR will introduce breakbulk (loose cargo such as steel and rice) freight service next week. “We intend have 16 trains per day at full capacity,” said the source. Transport PS Paul Maringa told Sunday Standard opposition to hauling cargo on the SGR was expected as it would significantly change the business environment. “It is awkward to be a shipper, a shipping agent, owner of a CFS and a tracker…if this is who you are then you do not want any business out of your hands,” Mr Maringa said. While expressing concern over the heavy beating on the CFSs from SGR, Mr Nzeki, however, welcomed the expansion of the port to serve the increasing regional trade. “The expansion of the port is a highly welcomed initiative that will improve capacity in line with the growing regional business,” Nzeki said. Apart from CFSs, other businesses that have received the SGR heat in Mombasa include road transporters and clearing and forwarding agents as shift favours Nairobi where containers are landed at Kenya Ports Authority’s Embakasi Inland Container Depot (ICD). Peter Otieno, chairman of the Car Importers Association of Kenya (CIAK), said the economy of Mombasa is currently experiencing a huge decline owing to the “relocation” of business and direct cargo haulage to Nairobi by SGR. Hezron Awiti, a CFS operator and transporter, expressed fear of a huge decline in business as the government pushes cargo owners to use SGR. “The government should allow for market forces to take root and give cargo owners a chance to choose which logistics to go for,” Awiti argues.