Compensation for SGR land exceeds budget by Sh2.8bn

Taxpayers will pay Sh2.8 billion above the amount the government had set aside to compensate property owners along the Nairobi-Mombasa standard gauge railway (SGR).

Transport principal secretary Irungu Nyakera on Monday said the land compensation bill stands at Sh33 billion or 10 per cent of the project cost of Sh327 billion.

The National Land Commission (NLC) had in March put the cost for wayleave acquisition at Sh30.2 billion, indicating a cost overrun of Sh2.8 billion as per the latest estimate.

“The land compensation cost for SGR is Sh33 billion,” said Mr Nyakera during Monday’s Land Summit at State House in Nairobi.

In March, the NLC said that 4,616 hectares would be acquired for the railway whose faster cargo and passenger trains are expected to halve the time taken from Mombasa to Nairobi.

Each passenger train will have a capacity of 1,096 people, with a designed speed of 120 kilometres per hour. The NLC delegated payment of the land billions to Kenya Railways amid claims of flawed compensation.

A leaked Kenya Railways internal audit report revealed massive irregularities in compensation of both individuals and companies whose land the government acquired to pave the way for the new railway.

Land owners in the same locality and with different property sizes were offered equal compensation; building owners were overpaid for their structures and others paid for land that belonged to the government.

The SGR, which will complement the slower narrow gauge network that is operated by Rift Valley Railways, is expected to be ready by mid next year.

Kenya Railways is paying land owners from collections done through the Rail Development Levy, which was introduced in 2013 to help finance upgrade of the rail network.

READ: Land compensation for SGR crosses Sh30 billion

The levy is charged at 1.5 per cent of imported goods, amounting to in excess of Sh22 billion annually.

“They (Kenya Railways) pay as they receive money periodically from the Rail Development Levy,” NLC chairman Muhammad Swazuri said.

MPs have questioned the rationale for the NLC delegating its constitutional mandate to Kenya Railways given that the corporation is also a beneficiary lined up for compensation.

Government officials plan to introduce a land valuation index that will classify which lands are eligible for compensation for projects and track prices across the country to simplify the process.

“It has become common that whenever the government announces a mega project, some individuals rush to the area in anticipation for hefty compensation,” said Land secretary Jacob Kaimenyi.

“We are moving to a regime where people will be compensated according to the actual value of their land and we shall differentiate the cases that are eligible for compensation, not all will be paid,” he added.