Economy

Chinese firm starts work on old railway link to SGR

sgr

Standard gauge railway (SGR). FILE PHOTO | NMG

john-mutua-img

Summary

  • CRBC started work last week and has already built two kilometres of the new meter gauge line that will link SGR to the old track.
  • The firm together with Kenya Railways have eight months to complete the job, including the rehabilitation works.
  • Sources familiar with the project reckon the plan to engage private backer was derailed after quotation for the upgrade by a contractor surpassed the envisaged budget by more than three times.

A Chinese firm has started building a 23.5 kilometre rail connecting the standard gauge railway (SGR) line to the old track in Naivasha under a multi-billion shilling contract that seeks to create seamless travel between the Mombasa port and Uganda.

China Road and Bridge Corporation (CRBC)— which constructed the $4.7 billion (Sh507.6 billion) SGR line from the port of Mombasa to Naivasha— is building the new short track and rehabilitating a decades-old line from Malaba on the border with Uganda to Longonot in Naivasha.

The involvement of the Chinese firm means that Kenya has dropped plans to tap funding from an unidentified private backer, who was expected to recoup its investments by operating the line.

CRBC started work last week and has already built two kilometres of the new meter gauge line that will link SGR to the old track.

The firm together with Kenya Railways have eight months to complete the job, including the rehabilitation works.

“The Chinese firm that built SGR is constructing the new line and the company together with Kenya Railways will work on the Malaba line,” KRC managing director Philip Mainga told the Business Daily.

Private investor

The project is expected to cost less than Sh8 billion, a smaller budget than Sh21 billion the government had estimated to spend with the private investor on board.

Sources familiar with the project reckon the plan to engage private backer was derailed after quotation for the upgrade by a contractor surpassed the envisaged budget by more than three times.

The private backer would have had to charge hefty fees to recover its investment based on the quotations.

The hitch has been blamed for the delay on the upgrade, which was to start last July.

The government maintains that rehabilitating the Naivasha-Malaba line and building another short track connecting the SGR at Naivasha is a quicker option than building another SGR.

It abandoned plans to extend the SGR line to Kisumu and later on to the Ugandan border after failing to secure a multi-billion-shilling loan from China, which had funded the first and second phases of the line.

The Sh320 billion SGR line linking the Port of Mombasa with Nairobi was opened in May 2017. It was later linked with the Sh150 billion line to Naivasha, which started operations last August.

Critics say the government is saddling future generations with debt from China.

But the authorities insist borrowing to build the infrastructure will spur economic development.

There have been concerns that the Mombasa to Naivasha SGR line, which cost an estimated Sh477 billion including financing costs, would not be economically viable if it were not connected to Kampala -- a major user of the Mombasa port for its imports.

Uganda is also said to be working on the reconstruction of the metre gauge railway line from Malaba to Kampala with funding from the European Union.

The upgrades for the two lines, Malaba-Kampala and Tororo-Gulu, will cost Uganda some Sh18 billion. Kenya had already offered to give Uganda land to construct an inland depot in Naivasha.

The renewed focus on the metre gauge line now dims hopes for fast-tracking of the Chinese-funded SGR, which was expected to reach Kisumu by 2022 and link it to a sea port for shipping of cargo to Uganda.