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SGR revenue plan goes off track

BUSINESS
By Awal Mohammed | April 22nd 2020

The standard gauge railway (SGR) will take longer to break even following disruption of passenger and cargo services by the coronavirus pandemic.

Income from the freight and commuter services was expected to ease the pressure on the Railway Development Levy and other budgetary supplements that the project has been heavily relying on to operate.

“Our operations have been affected. Until normalcy resumes and we start to operate, only then can we review our projections,” Kenya Railways Managing Director Phillip Mainga told The Standard.

Kenya borrowed Sh324.01 billion from China’s Exim Bank in May 2014 to build the 385-kilometre modern railway between Mombasa and Nairobi.

A five-year grace period on the loan ended last year, and the government will start paying the instalments this year.

But the SGR line raked in sales of only Sh10.1 billion in its second full year of operations, signalling that the mega project would take longer to break even.

Earlier this month after the government announced a cessation of movement in and out of Nairobi to curb the spread of Covid-19, Kenya Railways suspended the SGR commuter train to Mombasa, hurting the already struggling service.

Cargo transport was expected to shoulder the bigger burden in offsetting the loan, but the service has had low uptake with many transporters opting for the road.

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