Naivasha SGR section was an after-thought, feasibility studies now show

President Uhuru Kenyatta inaugurates the new Mai Mahiu Standard Gauge Railway station in Naivasha. [PSCU]
The recently unveiled section of the Standard Gauge Railway (SGR) from Nairobi to Naivasha was not in the initial plan of the modern railway, and might have been a costly afterthought.

Instead, the modern railway was to run from Mombasa through Nairobi to Kisumu and finally Malaba.

The inexplicable addition of the Nairobi-Naivasha section is yet another of President Uhuru Kenyatta’s adventurism that has resulted into inflation of cost of projects.

Naivasha, which is in Nakuru County, was chosen for its industrial potential, according to Government officials.

SEE ALSO :Grand SGR dreams die at Suswa

President Kenyatta has even doled out free land to South Sudan and Uganda for development of their own inland ports in Naivasha.

Unfortunately, the two countries Kenya is wooing have still not been plugged into the SGR, which was initially designed as an East African Community project. China Roads and Bridge Corporation (CRBC) had identified Kenya, Rwanda, South Sudan, Uganda and Ethiopia as integral to the viability of the modern railway. But with most of the countries yet to develop their sections of the railway and Ethiopia looking on towards Eritrea and Djibouti, Kenya has been left alone.

Experts have noted that without enough traffic, the SGR could easily be a white elephant. President Kenyatta insists any railway project results into development. “Let me assure you that even the section that remains, we will complete,” said an incensed Kenyatta when he launched the passenger train from Nairobi to Naivasha.

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Tough things

Hinting at how tough things were for the project, the President noted that challenges were always expected in any journey. “But when you go to the bathroom, you have to take off your clothes,” said Kenyatta in Swahili.

SEE ALSO :You are too blind to see my efforts, says Uhuru

“There will be difficulties on the road, but that should never stop or deter us from moving forward,” he explained.

China, the financier of SGR, has not released cash for the remaining section of the railway from Naivasha to Kisumu.

The Government had opted to upgrade the metre gauge, but there are reports showing the idea has been dropped altogether.

The current traffic is barely adequate to make the project financially and economically viable.

All the freight traffic - exports and imports - sum up to less than 15 million tonnes in a year; the SGR has an annual capacity of 20 million tonnes.

SEE ALSO :War on fakes hits Chinese goods

According to the World Bank’s study, for SGR to recoup its investments and impact the economy, it has to carry up to 55.2 million tonnes annually.  There is no such traffic. According to the Washington-based institution, not even when you aggregate all the cargo from South Sudan, Uganda and Rwanda with Kenya’s.

Yet the Government has continued to desperately scrap for any traffic it can lay its hands on, including forcing importers onto the SGR.

Before it decided to force traders onto the SGR by discouraging cargo nomination and use of the Container Freight Stations (CFSs) at the port of Mombasa, the Government through the Head of Public Service issued a circular on March 7 last year, directing all ministries, departments and agencies to use SGR for all their transportation. 

Official data shows rail freight traffic more than tripled from 1,147,000 in 2017 to 3,544,000 tonnes last year, following introduction of freight transportation services on the SGR. Revenue from railway freight, on the other hand, increased from Sh3 billion in 2017 to Sh9.8 billion last year. 

But this is barely enough to operate the railway and put aside some money to repay the over Sh400 billion loan the country took from China for the project.  So in March, KPA Managing Director Daniel Manduku cancelled an earlier notice that had allowed importers of nine commodities to use any CFS of their choice. 

SEE ALSO :How Kenyans may have lost Sh29b in SGR tender

Instead, he directed importers of sugar, steel, rice, second-hand clothes, reefer cargo and cooking oil to transfer their cargo to the Nairobi Inland Container Depot (ICD) via the new railway line. 

Other commodities that had been exempted from the forceful use of the SGR, but will now be transferred to ICD via the new line, include project cargo awaiting exemption letters from the Government, fertiliser and bitumen. 

While the cost then was Sh50,000 to move a 20-foot container from the SGR terminus in Miritini to the Inland Container Depot (ICD) in Nairobi, costs associated with the handling and storage of cargo at the port tend to push up this cost by more than 100 per cent, with the effect being cargo owners paying a total of Sh140,000 ($1,420). 

Cargo owners would pay truckers Sh65,000 for a similar 20-foot container moved from Mombasa to Nairobi. The bigger 40-foot container costs Sh85,000 by road. 

Currently, SGR’s annual running capacity is around 22 million tonnes (although there are plans to increase it to 31 million tonnes this year), an indication that the modern railway will be used to move goods made outside and not those produced in Kenya. The SGR desperately needs the other East African countries.

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Standard Gauge RailwaySGRUhuru Kenyatta