The new Nairobi-Naivasha railway line will cost about Sh150 billion, making it relatively more expensive than the Mombasa-Nairobi line.
This means each kilometre of the Naivasha line will cost Sh1.2 billion compared to Sh692 million for the Mombasa-Nairobi line – which legislators complained was an overpriced contract.
Kenya Railways Corporation managing director Atenus Maina said the 120-kilometre Naivasha line is expensive due to the terrain the new rail would cut through, including the building of longer bridges.
“The expansion of the project to Naivasha will cost Sh150 billion mainly because of difficult terrain,” said Mr Maina in an interview with the Business Daily, adding that the cost was arrived at after an internal review of the project. The terrain is the product of the Rift Valley that cuts across Naivasha and Limuru.
Construction cost of the 472-kilometre Mombasa-Nairobi line is Sh327 billion, but financing charges raise it to Sh447.5 billion.
The award of the contract to China Roads and Bridge Corporation (CRBC) sparked widespread criticism over the opaque bidding process.
The government acknowledged there was no public bidding, which it said was a condition of Chinese loans to help fund construction, as legislators complained that the contract was overpriced.
In May, President Uhuru Kenyatta said Kenya had opened talks with Chinese contractor building the Mombasa-Nairobi railway to extend the line to Naivasha from 2017. The extension will link special industrial zones to be established in Naivasha to Nairobi and Mombasa.
Naivasha is home to the Olkaria geothermal power plants. To attract investors to set up industrial complexes in specially designated zones near Olkaria, the government will offer them subsidised power tariffs.
Firms will also have power connected directly from Olkaria to ensure uninterrupted supplies, and in some cases, companies — such as those dealing in apparel manufacturing — will be allowed access to steam.
Kenya has previously said the new 472-km railway will cut freight costs to eight US cents a metric tonne (1.1 tonnes) per kilometre from 20 cents now.
The new line will ferry heavier and bigger containers faster and will relieve pressure on Kenya’s congested roads, increasing the country’s competitiveness as an investment destination.
Mr Kenyatta on Tuesday said the 472-km railway is 55 per cent done.
“We are extending to Naivasha as a result of this good progress. Plans are underway for an industrial park in Naivasha,” said the President.