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Jobs at stake as State issues new order on SGR use

BUSINESS
By Dominic Omondi | Aug 5th 2019 | 3 min read
By Dominic Omondi | August 5th 2019
BUSINESS

Kenya Ports Authority says half-year revenues for the Standard Gauge Railway cargo service released last month rose to Sh50 billion. [Maarufu Mohamed, Standard]

The business community at the Coast is staring at huge losses after the Government issued a new order to have all imported cargo transported through the Standard Gauge Railway (SGR) from Mombasa.

Among those facing uncertainty are employees of Container Freight Stations (CFS) and clearing and forwarding agents following the latest directive that will see the bulk of imported cargo cleared at the Nairobi Inland Container Depot (ICD).

In a public notice on Saturday, the Kenya Revenue Authority (KRA) and Kenya Ports Authority (KPA) ordered that starting Wednesday, all imported cargo going to Nairobi and beyond be transported on the SGR. The latest push is likely to spark protests, with transporters already having opposed earlier attempts to force them to use the new line, arguing that it is more expensive compared with using trucks.

However, KRA and KPA insisted that the move was aimed at improving cargo logistics at the Mombasa port and the Nairobi Inland Container Depot.

 “All imported cargo for delivery to Nairobi and the hinterland shall be conveyed by Standard Gauge Railway and cleared at the Inland Container Depot – Nairobi,” said the two agencies in the notice.

If implemented successfully, the new directive is likely to spell doom for the over 20 CFSs as well as hundreds of truckers operating across the region from the Mombasa base.

Other businesses in the transport value chain in Mombasa and other towns along the busy Nairobi-Mombasa highway such as restaurants and lodgings are also likely to be hit hard.

The move is one of the many attempts by the Government to shore up revenues even as the taxman gets an easy way of tracking the cargo as it moves along the railway to be cleared at the Nairobi ICD.

Intense scrutiny

KRA and KPA hope the latest directive will go a long way in breathing a new lease of life into the SGR whose commercial viability has in recent times come under intense scrutiny.

Despite being touted as a game-changer in growing the country’s economy, the SGR, especially the cargo service, has failed to live to its billing.

The new rail, which was expected to haul close to nine million tonnes of cargo, made a loss of nearly Sh10 billion in its first year of operation against a projected profit of Sh5.08 billion.

The cargo service also managed to haul a paltry 990,488 tonnes of cargo over the period.

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. Instead, he directed importers of sugar, steel, rice, second-hand clothes, reefer cargo, and cooking oil to transfer their cargo to the Nairobi 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.

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