Kenya yet to figure out how to pay for SGR
Friday November 27 2020
The Consolidated Government Investment Report 2019/2020 shows that Kenya is feeling the pressure of the Chinese debt used to finance the construction of the SGR. PHOTO | FILE | NMG
Kenya faces the daunting task of servicing loans for the standard gauge railway and run its operation after the freight service generated $78 million in revenue for the nine months period from January to September after transporting 3.1 million tonnes of cargo
The Kenya National Bureau of Statistics in its leading economic indicators report for September 2020 shows the revenues represented a marginal decrease from $79.8 million in 2019, when the line transported 3.1 million tonnes.
In the full year of last year, the SGR, built at a cost of $3.5 billion, generated $107 million and hauled 4.1 million tonnes of cargo. The decline in revenues shows the SGR remains a loss making venture considering taxpayers spend an average of $13.6 million per month on the operations, translating to $163.3 million annually.
The increasing burden on taxpayers has seen Parliament’s Transport committee push the government to renegotiate the operating agreement in order to reduce the operational costs by at least 50 per cent.
“The government should initiate the process of renegotiating the terms of the SGR with the lender due to the prevailing economic distress occasioned by the effects of the global pandemic,” said the committee in a report tabled to the National Assembly in September.
Underperformance
While the freight service continues to significantly underperform considering Kenya Railways Corporation (KRC) had set a target of transporting eight million tonnes of cargo by the end of this year, the passenger service is also likely to record a massive drop in revenues after it failed to operate for two months due to Covid-19 containment measures. The passenger service was suspended in May and June to contain the rise in the number of Covid-19 infections.
The SGR, which is operated by China’s Africa Star Railway Operation Company, generated $4.2 million from 422,471 passengers during the nine-month period compared to $10.8 million in revenues and 1.1 million passengers in 2019.
The Consolidated Government Investment Report 2019/2020 shows that Kenya is feeling the pressure of the Chinese debt used to finance the construction of the SGR.