Government departments and agencies have been ordered to transport all import and export cargo on the standard gauge railway (SGR), adding a new twist to ongoing efforts to beef up the revenue base for Kenya’s most prized infrastructure.
Head of Public Service Joseph Kinyua said in a March 7 circular that “all cargo imported and/or exported by government agencies, including cargo for projects undertaken by third parties, must be moved on SGR.”
Movement of any cargo between Mombasa and Nairobi by any other means shall require written consent from the Transport Principal Secretary, Mr Kinyua says.
To boost the uptake of cargo freight on the SGR, the Kenya Ports Authority (KPA) less than a fortnight ago slashed container handling charges for a 20-foot local container at the inland container depot (ICD) in Embakasi to Sh8,160 ($80) from Sh10,506 ($103).
The circular orders the ministries, agencies and departments (MDAs) to ensure that any cargo imported or exported through the port of Mombasa are moved to the Nairobi freight terminal and vice-versa on the SGR.
The MDAs are also required to declare the cargo being moved in the current financial year to the managing director of Kenya Railways and the Transport PS within 10 days.
Last month, Kenya Railways ordered importers based in Nairobi and beyond to start collecting their cargo from Nairobi’s ICD in Embakasi instead of the Mombasa port.
An estimated Sh23 billion has been spent on the upgrade of the Embakasi ICD, which now has the capacity to handle 450,000 20-foot containers annually.
Kenya’s railway freight traffic has over the years been on a steady decline, plunging 9.3 per cent in 2016 to 1.429 million tonnes from 1.575 million tonnes in 2015.
The decline happened even as total cargo arriving at the Mombasa port grew significantly, hitting a high of 10.9 per cent in 2017 to 30.35 million tonnes.
Container traffic rose from 98,586 twenty-foot equivalent units (TEUs) handled in 2016 to 1.190 million TEUs in 2017.
The KPA indicated that in the first two weeks of February, 671 TEU containers were delivered upcountry by rail, an increase of 233 TEUs on the deliveries a week earlier.
This growth is expected to accelerate with Mr Kinyua’s directive that will see all equipment and materials for big public infrastructure projects transported on the SGR.
The list includes equipment and materials for construction of Phase Two of the SGR as well as construction and upgrade of the road network.
Imports from the Far East grew significantly during the construction of the railway line between Mombasa and Nairobi, making Asia the largest source of imports in 2016, followed by Europe.
Early last year, the Kenya Revenue Authority’s (KRA) quest to have at least 40 per cent of cargo arriving at the port of Mombasa transported to Nairobi on the SGR for clearance at the inland container depot met resistance from transporters and importers.
Transporters have argued that the decision would push them out of business.
Transport secretary James Macharia also announced management changes at the Mombasa, port aiming to improve efficiency across the chain.
The Dock Workers Union has opposed the move, arguing that forcing traders to use SGR would result in job losses.
Even with the push to have its agencies use SGR for freight, the government has yet to address the shippers’ concerns that they are being forced to use the railway line.
This is not the first time the government has employed such tactics to boost usage of its infrastructure.
In 2016, all public officials were directed to fly the struggling national carrier Kenya Airways to boost passenger numbers.
Ministries and departments were also stopped from holding meetings in private hotels to reduce the hospitality budget.