$1.5b Naivasha inland container stays idle a month after launch

Sunday February 2 2020

Kenya’s Suswa station during the commissioning of SGR Phase 2A.

Kenya’s Suswa station during the commissioning of SGR Phase 2A. Kenya is hoping to increase the volumes of transit cargo being transported on the SGR. About 30 per cent of all cargo coming through Mombasa Port goes to neighbouring countries. PHOTO | SALATON NJAU  | NMG 

NJIRAINI MUCHIRA
By NJIRAINI MUCHIRA
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Kenya’s Naivasha inland container depot (ICD) has not received a cargo train more than a month after President Uhuru Kenyatta launched freight operations to the Rift Valley town, raising queries on the cause of the delay.

On December 17 last year, President Kenyatta launched the extended standard gauge railway (SGR) freight services from Mombasa to the Naivasha ICD, promising faster transportation of cargo to western Kenya and on to neighbouring countries.

The controversial SGR project has so far cost $5 billion in Chinese loans, with no clarity yet on its viability and Kenya’s ability to repay the massive debt.

“As we mark the completion of Naivasha ICD and commencement of freight operations, it is our expectation that these new transport infrastructure facilities will significantly support and provide anchorage for the development of the Naivasha Industrial Park,” President Kenyatta said at the launch last month at the SGR Nairobi terminus.

He said two trains would initially serve the Naivasha ICD with cargo destined for neighbouring countries, and that two shipping lines had committed to transport goods directly from Mombasa to Naivasha.

However, the $1.5 billion SGR Phase 2A facility is lying idle more than a month after the commissioning.

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The Naivasha ICD is at the heart of Kenya’s ambition to become the transport corridor of choice for neighbouring countries. The plan is facing competition from Tanzania’s central corridor.
Only the Madaraka Express passenger service launched in October last year has been running on Phase 2A, operating three trains per week from Nairobi to Suswa, some 120 kilometres.

The ICD contractor is yet to complete the facility in which the government has invested $65.7 million. Projections show that the soonest it will be ready is April.

“They are trying to rush the works, but if they go at a normal pace it can only be ready by July,” said a Customs agent who requested anonymity as he is not authorised to speak to the media.

The idle Nairobi-Naivasha line again brings into focus the viability of the entire SGR project.

“Kenya must find a way to make the SGR profitable particularly the return trip to Mombasa that is often empty,” said Mark Meassick, the mission director for Kenya and East Africa at the US Agency for International Development.

Incomplete infrastructure

Construction of the facility is said to be 70 per cent done, with key facilities such as the road linking it to the Mai Mahiu Narok road, internet and electricity connections, business blocks and other infrastructure being far from completion.

Large cargo transporters, who were on a tour of the facility a week ago are particularly concerned about the design of the seven-kilometre link road that is extremely narrow and could cause heavy traffic.

“No cargo can be picked from the Naivasha ICD because it has not been gazetted as a Customs point,” said Wanja Kiragu, operations director at East African Online Transport Agency.

Banks cannot open offices within the ICD to facilitate easy payment of duty by transporters.

This past Tuesday, managers from the Kenya Revenue Authority (KRA), Kenya Ports Authority (KPA) and Kenya Railways (KR) held a daylong meeting to discuss gazettement.

KRA is said to have imposed conditions like the putting up of floodlights within the facility and building of a perimeter wall before it can be gazetted.

“The indications from the meeting is that the soonest the gazettement could happen is in a fortnight,” said the Customs agent.

Officials at KPA, which owns the ICD, and KR however say the facility is operational.

“We have started using the ICD with officers stationed there,” said Bernard Osero, KPA head of corporate affairs.

Early last month KR acting managing director Philip Mainga sent letters to stakeholders notifying them of the cargo charges from Mombasa to Naivasha.

The letter also said that goods destined for the hinterland and neighbouring countries including Uganda, Rwanda, South Sudan, Burundi, Ethiopia and the Democratic Republic of Congo could be delivered straight to Naivasha from Mombasa, thus taking the cargo closer to the customer.

“We are pleased to inform you that, following the successful commissioning of freight operations to the Naivasha ICD, the facility is currently operational,” said Mr Mainga in the letter dated January 9, 2020.

According to the letter, KR has set the freight rates at $600 for a 20ft container for upward lift from Mombasa to Naivasha, and $300 for a downward trip.

The company will charge $850 for a 40ft container of up to 20.9 tonnes, and $910 for 21 tonnes and above for the inbound trip; $420 and $455 respectively for the Coastbound journey. The tariff for transporting empty containers is $120.

“The conventional cargo is billed at $0.044 per tonne/km,” said the letter.

Kenya is hoping to increase the volumes of transit cargo being transported on the SGR. About 30 per cent of all cargo coming through Mombasa Port goes to neighbouring countries.

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