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Economy

Manufacturers fault 79pc rise in SGR cargo charges

Miritini SGR terminus
Miritini SGR terminus. FILE PHOTO | NMG 

Manufacturers have protested over the January 1 increase of standard gauge railway (SGR) cargo charges by up to 79 per cent and want the State to first sort out the problem of delayed shipment clearance at port of Mombasa and Embakasi depot.

Kenya Association of Manufacturers (KAM) has petitioned Transport minister James Macharia to maintain the current rates, adding the higher charges will increase the costs of doing business.

The lobby wants easing of the cargo clearance bottlenecks at Mombasa port and Inland Container Depot (ICD) in Embakasi, verifaction of goods improved and delays in returning empty containers made a thing of the past, arguing they are paying more for storage charges or demurrage.

The cost of transporting a 20-foot container from Mombasa to Nairobi will increase to $500 (Sh51,275) from Sh35,000, a 46.5 per cent rise.

Hauling the larger 40-foot container will cost up to Sh$700 (Sh71,785), from the current Sh40,000, reflecting a 79.9 per cent rise.

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"We propose the ministry to consider extending the implementation of promotional rate to June, 2019 and thereafter gradually increase at a rate of five per cent every six months. This is to allow the agencies in the industry to streamline their services," said KAM chief executive Phyllis Wakiaga.

“They can’t increase the charges now. We want them to address all the operational [inefficiencies] existing at Mombasa port and at the ICD in Nairobi,” she said. The promotional tariffs were introduced in January when the service was introduced and were meant to end in April before being extended twice to June and December.

Those transporting cargo from Nairobi to Mombasa will pay $250 (Sh25,637) for a 20-foot container, up from Sh25,000 while a 40 foot container weighing up to 20 tonnes will cost $350 (Sh35,892) and $375 (38,456) for those weighing between 21-30 tonnes.

Kenya Railways has been charging Sh30,000 to transport a 40-foot container from Nairobi to Mombasa irrespective of weight.

The Treasury also expects the SGR business to generate more revenue to help offset loans used in building the multi-billion shilling railway line.

Kenya services China Exim Bank loans used for construction of the line and paid Sh26.61 billion in the year ended June.

The Treasury will pay Sh36.24 billion in the year starting July. Kenya borrowed Sh324 billion for the project from the bank in May 2014, to be repaid in 15 years, with a grace period of five years.

Cargo from Mombasa has been terminating at the inland container depot (ICD) in Nairobi’s Embakasi area. This has forced importers to spend between Sh15,000 and Sh20,000 to ferry cargo from the depot to industries within Nairobi and its environs.

With road transporters charging between Sh60,000 and Sh80,000 to ferry a 20-foot container from Mombasa port to the doorstep of the importer in Nairobi, SGR has faced stiff competition from truckers.

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