The promotional Sh700 fare on standard gauge railway (SGR) train between Nairobi and Mombasa will be withdrawn next year.
Kenya Railways managing director Atanas Maina said the charges would be adjusted after a fresh review of the rail operations.
“We will review SGR train fares in the next one year after making an assessment of our operations when we have sufficient data about our customers and their preferences,” Mr Maina told the Business Daily.
“However, all depends on the uptake and value addition we have to make in the meantime so we can establish the level and standards of service in line with customer demand.”
Mr Maina declined to disclose the direction of the new rates.
The government cut the fare to Sh700 from Sh900 during the launch of the railway services funded by China to drive traffic in Kenya’s biggest infrastructure project since independence more than 50 years ago.
The subsidised SGR train fares are inadequate to meet the operational costs in the short term.
However, taxpayers topped up the fares to pay loans and meet the operational costs of the new rail operated by China Communications Construction Company.
The Treasury allocated Sh15.5 billion to support SGR commercial operations before its launch.
The rail cargo business is set to start in January. It will cost $500 (Sh50,000) to transport a 20-foot container from Mombasa to Nairobi, Kenya Railways said.
The rates are expected to spark an uproar among transporters who charge an average of Sh80,000 per truckload. The truckers have asked the government not to subsidise freight transport, saying this will drive them out of business.
China Exim Bank financed the first phase of SGR between Mombasa and Nairobi at a cost of $3.8 billion (Sh387 billion), excluding interest — which will push its overall cost to Sh447.5 billion.
The railway line, which is expected to cut the cost of transport and boost trade by replacing a narrow-gauge line that has slower top speeds, will be maintained and operated by the China Road and Bridges Corporation for the next decade.
The Madaraka Express has cut the journey between Nairobi and Mombasa to four hours from 13 hours.
Last week, Kenya Railways started inter-county SGR train services, allowing passengers to commute along the seven stations between Nairobi and Mombasa in Mariakani, Miasenyi, Voi, Mtito Andei, Kibwezi, Emali and Athi River.