Markets & Finance

State pays Rift Valley Railways Sh415m from SGR cash


Section of railway line in Kibera, Nairobi, that was damaged at the height of 2008 post-poll violence. PHOTO | FILE

The government has paid Sh415 million to Rift Valley Railway (RVR) for damages caused on their tracks during the 2008 post-election violence from the standard gauge railway budget, investigations by the Ethics and Anti-Corruption Commission have revealed.

The anti-graft watchdog was investigating claims that Sh700 million set aside to conduct feasibility study of SGR had been misappropriated, leading to the discovery that it had been redirected to settle the claim that had been outstanding for more than five years.

“Investigations further established that part of the allocated money, Sh415,958,560.80, was used to pay off claims submitted by the concessionaire in respect of damage caused to the railway line as per the concession agreement,” reads part of the report.

Kenya Railways managing director Atanas Maina told the Business Daily that the claim was related to damages caused on the rail during the post-election violence and the estimated loss of business over the period.

The cash had been set aside for feasibility studies which was later conducted by the Chinese government for free.

Of the Sh700 million set aside Sh279 million is still held by Kenya Railways, the State railroad landlord, with Sh4.2 million having been spent to advertise for international tenders, bidders’ conference and evaluation before the Chinese took up the job.

The use of investigation to point out diversion of funds by the Treasury raises queries on procedures of moving funds between government departments.

“EACC recommended that the file be closed but advisory be issued to the KRC and National Treasury to come up with watertight systems that would ensure safety of the public funds,” reads part of the report.

Diversion of funds from their initial allocation was one of the main issues singled out by the controversial audit report on the Ministry of Health.

The National Treasury is mandated to file any reallocation in the budget with parliament for approval through the supplementary budget. It has leeway to execute such diversions prior to getting approval from parliament but has to file the changes within two months.

The payment to RVR piles up on huge losses incurred during the post-election violence whose effects saw the economy grow by only 1.3 per cent in 2008.

Traders from neighbouring Uganda and Rwanda are still chasing a Sh4.75 claim for losses incurred during the same period relating to goods, which were being transported through the country.

Businesspeople from the two landlocked states, which rely on Mombasa port for imports and exports, initially estimated their losses at Sh20 billion.

READ: Kenya seeks review of Rwanda, Uganda poll violence claims

Only 13 traders, 12 from Uganda and one from Rwanda, managed to present evidence of losses incurred on the Kenyan soil leading to the drastic cut of the compensation bill to Sh4.75 billion.

Kenya agreed to settle the claims in 2012 when Mwai Kibaki was still president but the payment is still pending with the traders accusing the government of putting their case in the back banner since Mr Kibaki left office.

RVR is also to be compensated by Kenya Railways for any loss of business arising from the construction of the standard gauge railway.