Passenger fares for children on the standard gauge railway (SGR) trains from Mombasa to Nairobi are set to increase 100 per cent in a bid to raise more revenue to pay the Chinese operator.
Kenya Railways says it is working on a proposal that will remove the subsidy offered to children between the ages of three and 11 that has been in place since May 2017.
The minors currently pay Sh1,500 for first class and Sh500 for economy class tickets compared to Sh3,000 and Sh1,000 by adults respectively.
The planned review, which is subject to approval by the Transport ministry, comes months after Kenya Railways raised cargo charges on the line by up to 79 per cent.
“We are looking at the model where charges will be based on the seat irrespective of the traveller's age,” Philip Mainga, the acting Kenya Railways managing director, told the Business Daily in a phone interview. “This is our proposal and it’s subject to approval by the ministry.”
The economy passenger tariff was increased in May to Sh1,000 from the promotional fare of Sh700. The review left the minors tariff unchanged.
Kenya requires additional cash from the railway business to ease the taxpayer’s burden of paying the Chinese SGR operator.
China Road and Bridge Corporation (CRBC) runs the SGR cargo and passenger business at an undisclosed management fee.
The Treasury also expects the SGR business to generate more revenue to help offset loans taken to build the multi-billion shilling railway line.
It will pay Sh36.24 billion in the current year, which will rise to Sh82.5 billion from July when loan becomes due.
Kenya borrowed Sh324 billion for the project from from China Exim Bank in May 2014, to be repaid in 15 years, with a grace period of five years.
Kenya’s key strategic assets at home and abroad will not be protected by “sovereignty” and risk being seized by the Chinese government should there be a default in repaying the SGR loan, a copy of the contract says.
The initial agreement for the Mombasa-Nairobi railway signed on May 11, 2014 also details how the pact will be governed by Chinese laws, with all disputes being arbitrated in Beijing.