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The Nairobian

Sh16 billion enough to build new rail project , says leading UK magazine

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By Dominic Omondi | Jun 06, 2016

Sh16 billion was all that Kenya needed to construct a well-functioning standard gauge railway (SGR), a British magazine has claimed.

According to an article published by The Economist, the money would have been enough to upgrade the old railway into an SGR, which would have been as good as the one currently under construction.

This would have spared the taxpayer a whopping Sh311 billion, enough to fund all the 47 counties. Kenya negotiated for a Sh327 billion bilateral loan from China for the project.

In what is likely to inflame passions, the article seems to conclude that Kenya’s future generations will shoulder the burden of repaying the Sh327 billion debt, which could have been avoided.

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The railway line is supposed to run from the Port of Mombasa to the shores of Lake Victoria in western Kenya.

The Government projects that, once it starts operating, the SGR will increase the country’s Gross Domestic Product (GDP) by 1.5 per cent, from savings made from cheap transport cost and efficiency in ferrying increased cargo volume.

However, in a hard-hitting article The Economist disagrees that Kenya will reap such benefits. The article goes on to state Kenyans will be paying dearly for the loan for what is basically a “third-rate railway.”

According to the article, “Africa Railways Risks the way of the Old Ones,” the new railway which left a massive hole in the country’s accounts is no better than the old one built by the British more than a century ago.

If anything, the Government could have paid far less and probably funded it from internally generated revenue, says the article.

According to a World Bank official, Peirre Pozzo di Borgo, the SGR is a rip off. He is quoted saying that rehabilitating the older line would have cost just five per cent as much as building a new one. It is not very clear how the loan will be repaid, notes the article. “Repaying the loans taken out to build the line will require hefty fees or huge volumes of traffic.

But truckers-who now handle more than 95 per cent of freight moved from Mombasa port will compete fiercely on price, and shipping companies may look to other ports if levies rise,” notes the article. It also cited that truckers have in the past thwarted efforts by African governments’ to upgrade the old railway lines.

“Its (Kenya’s) fastest trains will do a fairly mediocre 80kph. Much as with the old railway, parts of the new line will be single-track, forcing trains to stop, often for hours to let others pass,” says the article.

The article goes on to note that “the rail is built on a lower standard of load bearing than most other new freight railways. “This means that it might not be possible to load four full containers onto each wagon, as is done with other new lines.”