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Economy

Kenya revises SGR revenue downward 44pc to Sh5.7bn

Wu Peng
Chinese Ambassador to Kenya Wu Peng addresses guests at the Kenya Editors Guild Press Club Luncheon in Nairobi last week. PHOTO | FRANCIS NDERITU 

Kenya has revised downwards the earnings from the standard gauge railway (SGR) in the first full year of operations by 44 per cent, raising questions over the accuracy of reports on the performance of the mega project.

Official data released on Friday showed that SGR generated sales of Sh5.7 billion last year on the back of the cargo business.

These figures are different from the numbers disclosed in March showing the SGR generated sales of Sh10.33 billion, a performance that was the basis of laudatory public comments by the new Chinese ambassador to Kenya Wu Peng last week.

"Of course China fully respects Kenya’s opinion and decision on when to start Naivasha-Kisumu line.

“We believe SGR is economically viable. Note that in the first year of operations, Mombasa-Nairobi SGR has earned Sh10.33 billion, which is close to the operating cost of Sh12 billion. It’s never easy for a railway project to achieve nearly break-even in a year.

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“Kenyan and Chinese operators deserve credit for that achievement. China has full confidence in Kenya’s ability to make profits from SGR,” said Mr Peng last week.

The Kenya National Bureau of Statistics (KNBS) failed to disclose the reasons behind the downward revision of the numbers by up to 44 per cent, turning the spotlight on the tracking and collection of SGR earnings data. It also signals that the mega project would take longer to break-even.

The performance data released earlier showed SGR earned Sh10.33 billion against the annual operation costs estimated at Sh12 billion.

Freight services, which started in January 2018, generated Sh4 billion in the year to December against the initial announcement of Sh8.72 billion, the KNBS statistics indicate.

The data show China Communications Construction Company, the operator, sold slightly more than 1.66 million tickets, earning Sh1.61 billion in revenue during the year.

The income was not enough to meet the operation costs, which were earlier estimated at Sh1 billion a month or Sh12 billion a year.

This prompted an increase in freight charges this year and decision to raise passenger fares for children on Mombasa-Nairobi trains by 100 per cent in a bid to raise more revenue to pay the Chinese operator.

The SGR line has struggled to attract adequate cargo volumes with investors balking at the tariffs to transport goods from the Mombasa port to the Inland Container Depot in Nairobi.

Some 2,898,673 tonnes were ferried from Mombasa to Nairobi between January-December 2018, the KNBS data shows.

In March, the agency said 5,039,988 tonnes were ferried.

China Road and Bridge Corporation runs the SGR cargo and passenger business at an undisclosed management fee.

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