SGR Records Ksh 21 Billion Loss Since Its Inception
Kevin Namunwa  |  Sep 10, 2020

The Standard Gauge Railway (SGR) has posted a combined operating loss of Ksh 21.68 billion in the three years it has been operational to May 2020.

A report sent to parliament by the Transport ministry revealed that the railway netted Ksh 25.03 billion in revenue against operational costs that total to Ksh 46.71 billion. Taxpayers will have to plug the Ksh 21.68 billion gap.

The SGR project still owes the company that manned the project and the debt rises as the railway line continues operating.

The operational loss has already caused the Kenya Railways Company (KRC) to default on an estimated Ksh 40 billion payout to China’s Africa Star Railway Operation Company.

The Chinese company runs both passenger and cargo services on the SGR.

The poor performance of the project is attributed to reduced limited storage capacity at the Embakasi Inland Container Depot (ICD), minimum use of the Nairobi Freight Terminal that handles cargo not stored in containers and the rail charges.

 The SGR has struggled to attract adequate cargo volumes, with investors balking at the tariffs for transporting goods from the Port of Mombasa to the Inland Container Depot (ICD) in Nairobi.

The freight services formed the main economic justification for the Ksh 323.20 billion President Uhuru Kenyatta’s administration pumped into the project through loans largely procured from Exim Bank of China from May 2014.

The losses have dimmed hopes that the SGR would generate enough revenues to finance its operations estimated at Sh1.5 billion a month or Sh18 billion a year and pay the Chinese loans.

Kenya borrowed Sh324 billion for the project from the Exim Bank of China in May 2014 and started paying the loan last year after expiry of the five-year grace period.