Kenya postpones full control of SGR operations again to December 2025

“People have been asking so many questions and I can now confirm successfully taken over from the Chinese and we are now at 98 percent. By December we will be at 100 percent. We localised the staff who are working for the Rail Way. These are our brothers and sisters and they are all Kenyans. In the process, we have created employment for 1,500 people and contributed to the growth of the economy,” he said in an interview.

The CEO had in July 2024 indicated that KRC had taken over 90 percent of the operations of the SGR line from Afristar ahead of a planned full takeover in June 2025 as part of a plan to reduce soaring operational costs that have become a matter of grave public concern.

Read: SGR revenue hits record Sh18bn as demand grows

Mr Mainga said there were “pending issues around the technical operations of the SGR” that needed to be addressed before the full takeover.

“We have a few technical skills including the safety of the locomotives that we need to address but this will be completed by December 2025” he said.

Out of the total 52 SGR functions, KRC had by July 2024 fully taken over 47 functions including security, passenger services, rolling stock management, track maintenance, partial signalling responsibilities, electrical and communication systems, and certain transport operations.

This left Afristar with five functions including management of signalling systems, dispatch coordination, freight management, and operations in Port Reitz and Nairobi Terminus. Mr Mainga did not specify the additional functions that KRC has since assumed, pushing its grip to 98 percent.

KRC awarded Afristar, which is owned by China Road and Bridge Corporation, a subsidiary of the majority Chinese state-owned China Communications Construction Company, a 10-year contract to operate and maintain Kenya's Mombasa-Nairobi-Naivasha which runs for 592 kilometres.

The agreement excluded KRC from collecting revenues from sales and the operational costs later jumped beyond the roof with government data showing that taxpayers were forking out close to Sh1 billion per month on the running of the railway line which resulted in accumulated pending bills of more than Sh38 billion in mid-2020.

The agreement included a provision for the revision or termination of the contract every five years and KRC chose not to continue the contract at the end of the initial five-year period ending in May 2021.

As such Kenya started a gradual takeover of the SGR operations in March 2021 after three years of negotiations with Afristar albeit with a condition that KRC clears all pending bills owed to the Chinese firm.

The cost of operating the SGR has been a concern with data by the Transport Ministry showing that taxpayers spend an average of Sh1 billion per month on the operations of the Mombasa-Nairobi railway alone.

Apart from the operating fees, Kenya is obligated to honour repayment of the Sh324 billion it borrowed for the project from the Exim Bank of China in May 2014 and started repaying last year after the expiry of the five-year grace period.

Mr Mainga said that revenue generated by SGR is expected to increase each year due to growing demand for its services including the premium class which costs Sh12,000.

“There is a high and low season for every industry. If you look at our revenues, we have managed to record a 25 percent increase in revenue and we are now at Sh22 billion. This is partly due to the modernisation of our facilities and a deliberate effort by the government since 2018 to improve our infrastructure. The premium class we launched for instance is always fully booked,” he said.

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