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Naivasha-Malaba rail plan hits costs hurdle

Chinese workers inspect the Nairobi-Naivasha SGR line
Chinese workers inspect the Nairobi-Naivasha SGR line. FILE PHOTO | NMG 

The upgrade of the old railway track from Naivasha to Malaba has run into headwinds after its costs surpassed the government's budget, shattering plans to link the century-old line to the standard gauge railway (SGR) at Naivasha.

The government had estimated that revamping the metre gauge railway (MGR) line to Malaba would cost Sh21 billion. The funding was to come from an unidentified private backer, an option seen as cheaper compared to building a new modern line with Chinese loans. The private investor was expected to recover the investments from higher freight fees on cargo and passenger fares.

However, sources familiar with the plan have said that a quotation for the upgrade project done by a Chinese contractor had surpassed the envisaged budget by more than three times, sending the government back to the drawing board.

This problem has been blamed for the inaction on the upgrade plan, worse construction work was meant to start in July before being moved to August. Now the Transport ministry says that fresh approvals for the revamp of the old line are needed, throwing the Sh21 billion investment plan into uncertainty.

The delay in revamping the new line and construction of a dry port in Mombasa are also behind the exclusion of the cargo business in today’s launch of the Nairobi-Naivasha SGR line, which will only handle the passenger business.

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“Quotations from the Chinese contractor were beyond government expectations and it brought the upgrade costs almost close to building a new SGR line,” said a source who requested anonymity.

“The private investor was going to charge hefty fees to recover their investment based on the Chinese quotations.”

The public-private-partnership contract would have helped the government avoid tapping more loans while providing a reliable railway connection between Naivasha and the Ugandan border for onward connection to Kampala. The ultimate aim was to ensure the line eventually reached Kigali.

Kenya dropped its bid to extend the SGR to Kisumu and later on to the Ugandan border after failing to secure a multi-billion-shilling loan from China, which had funded the first and second phases of the new railway line.

The Sh320 billion SGR line railway linking the port of Mombasa with Nairobi was opened in May 2017, which was later linked with to the Sh150 billion line to Naivasha. The Nairobi-Naivasha SGR line was meant to be connected to the old railway running to the Malaba border town to allow for seamless movement of cargo from the Mombasa port to Uganda. The Transport ministry had expected the upgrade to be done in months starting from July.

Tuesday, Kenya Railways acting managing director Philip Maingi and Transport Secretary James Macharia failed to respond to the Business Daily’s questions on the delayed upgrade of the rail and quotation from the Chinese contractor.

Upgrading the old Naivasha-Nakuru-Eldoret-Malaba line will cost an estimated Sh15 billion ($150 million) while building the new road and rail link from Maai Mahiu to the Naivasha MGR station will cost about Sh6 billion ($60 million).

Malaba-Kampala

Transporters will truck cargo through the Maai Mahiu–Narok road to the Naivasha MGR station before completion of the 43-kilometre railway line between the old and the new railway stations.

There have been concerns that the Mombasa to Naivasha SGR line, which cost an estimated Sh477 billion, would not be economically viable if it is not connected to Kampala which is a major user of the Mombasa port for its imports.

Uganda is also said to be working on the reconstruction of the Metre Gauge Railway line from Malaba to Kampala with funding from the European Union. The upgrades for the two lines, Malaba-Kampala and Tororo-Gulu, will cost that country some Sh18 billion. Kenya already offered to give Uganda land to construct an inland depot in Naivasha.

The renewed focus on the MGR line now dims hopes for fast-tracking of the Chinese-funded SGR, which was expected to reach Kisumu by 2022 and link it to a sea port for shipping of cargo to Uganda.

State House yesterday confirmed that President Uhuru Kenyatta will today launch the Nairobi-Naivasha SGR line. The President earlier yesterday made an impromptu visit to the Kisumu port, where work to upgrade it has been ongoing.

The passenger services on the Nairobi-Naivasha SGR line to be launched today will only be available in four of the 12 stations including Ongata Rongai, Ngong, Maai Mahiu and Suswa. Kenya Railways failed to offer details on the cargo freight — which is critical in ensuring the new line generates revenues to pay the Chinese operator and China loans used for its construction.

Official data showed that SGR generated sales of Sh5.7 billion last year on the back of the cargo business. The passenger business generated sales of Sh1.61 billion, underlining the power of the cargo business in driving sales.

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