Taxpayers to cough Sh8.3bn more for SGR PhaseII strip construction

juma chrispinus

February 27, 2017 5:34 PM

The construction of the SGR has had major setbacks, ranging from compensation to its passage in the Nairobi National Reserve.

Kenyan taxpayers will have to fork out an additional Sh8.3 billion to satisfy the bulging appetite for the completion of Standard Gauge Railway Phase II.

The funds, which is a five per cent of the total cost, is by far higher than what was contributed for the construction of the already completed Mombasa-Nairobi section.

In the earlier agreement, China, the main financier, provided major project loans covering direct construction costs for the 472km line, while the government had to make compensation for land, equal to 10 per cent.

Phase IIA which will link Nairobi and Narok is set to cost Sh153 billion, with Kenya contributing Sh23 billion in cash.

The expenditure now is way above the planned Sh15.3 billion that was budgeted for earlier, government officials citing a desire to hasten the loan repayment period as the “terms of the facility were purely commercial.”

Earlier, the government had planned to spend its 90 per cent and 10 per cent combination of borrowing and own cash respectively for the project.

Officials said the slight reduction in the proportion of borrowed funds was informed by a desire to hasten the loan repayment period as the terms of the facility were purely commercial.

Transport Permanent Secretary Irungu Nyakera told a local daily that funds had been “allocated in the current and next financial years to fund the second phase of the project, whose construction begins in April.”

Nyakera was speaking when he made a tour on Nairobi’s new Inland Container Depot (ICD) (yet to be commissioned). The depot is set to receive freights destined for the capital Nairobi.

In the current appropriations, nearly Sh62 billion has been allocated for railway operations, a huge chunk targeting operational expenses such as subsidising the initial months of freight and passenger transport.

Serial challenges

Last year, there were massive marching in the capital Nairobi by the wild animal activists pushing for the halt of the passage of the railway line in the only city’s national reserve.

juma chrispinus