Economy

Higher levy plan for importers avoiding SGR

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A cargo train. PHOTO | WACHIRA MWANGI | NMG

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Summary

  • Parliament has recommended an increase of the Railway Development Levy by 0.3 percentage points or 2.8 percent of the cost of goods ferried by road.
  • Currently transporters pay 2.5 percent of the cost of imported goods in Railway Development Levy to move goods from the port of Mombasa to Nairobi and the hinterland.

Importers who choose to transport goods by road face higher rail import levy in a move aimed at encouraging the use of the standard gauge railway (SGR).

Parliament has recommended an increase of the Railway Development Levy by 0.3 percentage points or 2.8 percent of the cost of goods ferried by road.

Currently transporters pay 2.5 percent of the cost of imported goods in Railway Development Levy to move goods from the port of Mombasa to Nairobi and the hinterland.

But those using SGR will pay a lower fee of 1.5 percent if recommendations of the National Assembly transport committee are adopted.

“The committee recommends that…importers who choose to haul their goods using the SGR can pay a preferential Railway Development Levy of 1.5 percent of the value of goods.

“Conversely, importers who choose to use the road transport will attract an additional surcharge of 0.3 percent of the value of goods imported (up to a maximum of $138 (Sh14,900),” the committee said in a report on the inquiry into the use of SGR.

Some importers reckon their transport costs shoot up when they use the rail due to extra fees, more time spent clearing goods at the congested Nairobi depot and the need to send a truck to collect the goods from there.

These importers used to truck their goods in from the Mombasa port.

The committee says the proposed rate of surcharge can be subject to review by the relevant stakeholders including the Cabinet Secretary for Transport, importers, Container Freight Stations, transporters and the Kenya National Chamber of Commerce, among others.

The committee made the recommendations following an inquiry into concerns raised by Mvita MP Abdulswamad Nassir over a government directive requiring haulage of cargo destined for Nairobi and hinterland through SGR.

It also investigated a May directive requiring all transit cargo be transported to Naivasha.

“Importers should have the freedom of choice on the mode of transport to haul their goods from the port to the final destination without restrictions from any government agency,” the report recommends.

The State backed down from its May directive on the use of SGR for all cargo destined to Nairobi and beyond following pressure from regional economies.