× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

SGR four years on – the hits and misses

FINANCIAL STANDARD
By Macharia Kamau | June 1st 2021
A section of Standard Gauge Railway (SGR) train at Syokimau in Nairobi. [David Njaaga, Standard]

On May 31, 2017, the Standard Gauge Railway (SGR) passenger service made its maiden trip from Mombasa to Nairobi. 

The launch of the Madaraka Express was greeted with both cheer and jeer, with the optimists noting it could significantly boost travel while opposers argued the high cost of building the railway would overshadow any good from it.

Four years after the inaugural trip, the rail service has had its highs and lows.

Among the highs are the ease in movement of passengers. The journey between Nairobi and Mombasa that sometimes took more than 10 hours by road now lasts four hours, and at a lower cost.

Cargo, too, can move at much faster speed after the SGR freight service was launched in 2018, and owners no longer have to worry about the safety of their goods in transit.

Developed capacity

Kenya Railways Corporation (KRC) believes it has developed capacity to operate the railway, and has started taking over some of the functions from the Chinese firm it had contracted to run SGR.

The flipside, however, is that road transport remains cheaper for moving cargo. This is partly on account of moving cargo from the inland container depots (ICDs) to the final destination.

SGR has also been operating at a loss. A Ministry of Transport report to Parliament in September last year indicated that the railway’s revenues over the three years to May 2020 were at Sh25 billion, against operational costs of Sh46.7 billion. 

The government has, however, defended the money that SGR makes, noting that the railway is supposed to facilitate business and should be judged on the impact it has on different economic sectors.

The cost of moving cargo on SGR remains a thorny issue. While freight from point to point on rail is cheaper compared to road, there are other components that make rail more expensive.

Shippers Council of East Africa Chief Executive Gilbert Langat said factors such as moving cargo to the owners’ premises from the ICDs, also referred to as last mile, and returning empty containers to Mombasa have the impact of increasing SGR costs by as much as 30 per cent compared to trucking.

“The freight service might be cheaper but when you consider handling charges at the ICDs, last mile costs and the return of an empty container to Mombasa, moving cargo on SGR will cost an average of $1,200 (Sh128,400) per container, but on road all these will cost you between $600 (Sh64,200) and $800 (Sh85,600),” he said.

Excluding the handling and last mile costs, moving cargo on SGR costs about $500 (Sh53,000).

“There is need to have a policy that will cater for an end-to-end solution or possibly contract road transporters to offer last mile services,” Mr Langat said.

Safety of cargo

The last mile has been a major issue of concern among cargo owners, who initially had to grapple with dilapidated access roads to Nairobi’s ICD, which have since been fixed.

Langat, however, said among the positives of the Madaraka Express Freight Service is increased safety of cargo.

“It has had a positive impact on cargo transportation, particularly safety of the cargo,” he said. “You don’t have to worry about cargo being stolen or accidents on the highway.”

When the SGR was extended to Naivasha, it was with expectations that it would go further to Kisumu. It, however, seems that Naivasha will be its last stop.

China, which was expected to finance the project, appeared jittery and sent the government back to undertake a feasibility study on whether the extension to Kisumu was viable.

With little funds to build the remaining bit on its own, the government decided to refurbish the old metre-gauge railway to link with the SGR and offer shippers an alternative way of moving goods between Mombasa and Malaba.

Giving the old line a new lease of life is seen by many as a good move that will save taxpayer funds. The repair works are being undertaken by the Kenya Defence Forces and the National Youth Service.

Over the four years, KRC says it has gone through the learning curve and can now operate SGR. Earlier this year, the State firm initiated the process to cut ties with the SGR operator, Africa Star Railway Operations Company (Afristar).

The operator, a subsidiary of China Road and Bridge Corporation that built the railway, has been overseeing the Madaraka Express Service since inception.

[email protected]     

Share this story
Sasini to sponsor KTN's talent search Talanta Mtaani
The programme debunks narrative one has to do certain specific things to be successful in life through career options that only glorify A students.
Fight for gender parity continues 58 years on
Mutahi was also the first female chair of the Kenya Private Sector Alliance.
.
RECOMMENDED NEWS
Feedback