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Shipping & Logistics

Naivasha SGR starts operations amid viability concerns

Chinese workers inspect the Nairobi-Naivasha SGR line
Chinese workers inspect the Nairobi-Naivasha SGR line. FILE PHOTO | NMG 

As the second phase of the Standard Gauge Railway (SGR) opens Wednesday, questions abound on its viability even as uncertainty remains over the funding to complete last phase to Ugandan border in order to make it commercially viable.

The launch today will only be for passengers with cargo expected to be introduced later.

The Chinese funding for the last phase of the SGR to Malaba had been pegged on the willingness by Uganda to build its part from the Kenyan border to Kampala. However, Uganda seems to have hit a snag in terms of funding after China turned down their proposal, forcing the landlocked neighbour to start rehabilitating its metre gauge railway.

Cargo brings the bulk of revenue for the Kenya Railway and with incomplete phase, it makes it difficult for the government to recoup money to pay Sh150 billion loan spent on this section alone as the volumes of goods will be inadequate.

“The government has apparently put money on something that do not have viability at the moment. The essence of the second phase of SGR was to serve businesses at the proposed industrial park in Naivasha, but at the moment we do not know how far the plans have moved,” economist Toni Watima told Digital.

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Mr Watima said carrying passengers on the SGR was just a second thought as the types of trains being used to ferry them are meant for freight services. The economist argued that there are no sufficient volumes of goods at the moment to break even for the Sh150 billion that was spent on that route.

At the same time, the route is unlikely to be popular with travellers especially given the last mile connection that would require additional expenses for commuters.

The Naivasha SGR has stations at Rongai, Suswa in Narok and Mai Mahiu in Naivasha.

Recently, President Uhuru Kenyatta said Kenya would allocate 10 acres to South Sudan at the Inland Container Depot at the Naivasha Industrial Park to ease movement of goods to the neighbouring nation.

The port will see South Sudan cut on the journey it makes to Mombasa to collect and clear goods destined to Juba as this can be done at the dry port. Also in March this year, the government announced that it would give land to Uganda for construction of a dry port in Naivasha.

Uganda is the biggest market for Kenyan goods and the biggest client to the Port of Mombasa, especially for transit cargo, ahead of Democratic Republic of Congo (DRC), South Sudan and Rwanda.

But until the dry ports and industrial park are put in place, there will be inadequate cargo destined to western part of the country.

The plans of putting up a dry port in Naivasha gained momentum last month after the cabinet approved Sh6.9 billion. The funds will also be used in construction of the railway marshalling yard, logistics zone and public utility area.

Gilbert Lagat, chief executive officer of the shippers council, said the dry ports have to be efficient to succeed.

“Shipper have no problem with ports anywhere. The determinant for us is the cost and efficiency in handling our consignments,” said Mr Langat.

SGR is part of the northern corridor transport network, which connects the Port of Mombasa to the neighbouring landlocked countries of Uganda, Rwanda, Burundi and South Sudan.

Kenya has been banking on the Kisumu port to serve regional countries in the event the country lacks funds to extend the railway to Malaba.

Kisumu port is estimated to cost about Sh14 billion, and the Treasury will need to secure about Sh350 billion for the Naivasha-Kisumu section of the SGR.

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