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State to spend extra Sh18b on SGR land compensation

BUSINESS NEWS
By Patrick Alushula | March 25th 2016

The Government will spend Sh18 billion on land compensation in the second phase of the Standard Gauge Railway (SGR) project.

The next phase of the railway project follows Cabinet’s approval of the Mombasa-Kisumu line, which will pass through Naivasha.

Speaking during the launch of SGR Corporate Social Responsibility report yesterday, National Land Commission Chairman Muhammad Swazuri said the first phase of the project cost the Government Sh12 billion.

He said compensation costs are becoming a nightmare for the Government as landowners are using it as an avenue to make money.

“We need to change this narrative as Kenyans. I do not believe it will be sustainable for us to continue paying out such huge amounts of money. If people continue demanding for market value of land, the Government will not make it,” said Swazuri.

Speaking at the same function, Transport Principal Secretary Irungu Nyakera said the project, which is expected to take 54 months, would cost Sh508 billion ($5 billion), including the cost of expanding the Kisumu port.

He also raised concern over the high costs of compensation, saying the ministry would be proposing for a change in compensation procedure.

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Since the Government owns land, he said it would be cheaper to compensate people by resettling them on idle State property, instead of paying out cash.

“When we were discussing the pipeline deal with Ugandans, one of the issues that came up was land compensation. Ugandan experts said it was expensive and they do not see how we can [compensate people] within a short time” he said.

As work on the second phase starts, Mr Nyakera said the Government would continue engaging with environmentalists to allow the railway pass through the animal park.

He said if the discussions collapse, the alternative route would increase project costs by Sh60 billion to Sh70 billion.

“The alternative route is Athi River. The cost of this alternative route alone is about Sh40.6 billion [$400 million], plus compensation costs of about Sh400 million,” he said.

Environmentalists have been opposed to the idea of the railway passing through the Nairobi National Park, saying it poses a threat to wildlife.

Sun Liqiang, the general manger of the SGR contractor, China Road & Bridge Construction (CRBC), said the company has committed to increase local content materials used in the second phase to 47 per cent.

This is expected to see more Kenyans engage in the construction process.

So far, he added, the company has employed more than 38,000 Kenyans. Of these, 21 in direct employment, about 1,000 are in managerial positions, and 10,000 have been engaged by sub-contractors.

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