Kenya’s Standard Gauge Railway fails to break even for the second year in a row and rakes in a paltry $101 million in sales

Kenya's Standard Gauge Railway (SGR) train arrives at the Nairobi Terminus on the outskirts of Nairobi, Kenya May 31, 2017.
  • China Road and Bridge Corporation (CRBC) runs the SGR cargo and passenger business for an undisclosed management fee.
  • Freight services, which started in January 2018, generated Sh8.4 billion ($84 million) in the year to June while passenger sales grew by 43% to Sh1.76 billion.
  • The Chinese built railway line requires an estimated Sh1.5 billion ($15 million) a month or Sh18 billion ($180 million) a year to meet the operation costs.

It will take Kenya’s Standard Gauge Railway way longer than expected to break even following another year of below average performance.

The railway line, which is Kenya’s most expensive and largest infrastructure project since independence , raked in sales of Sh10.1 billion ($101 million) in its second full year of operations.

Keeping in mind that the Chinese built railway line requires an estimated Sh1.5 billion ($15 million) a month or Sh18 billion ($180 million) a year to meet the operation costs, the whole year’s revenue is but a drop in the action.

China Road and Bridge Corporation (CRBC) runs the SGR cargo and passenger business for an undisclosed management fee.

Kenya Railways had budgeted to earn some Sh24 billion ($240 million) from the cargo service in the year to June, falling 65.56% below target.

Freight services, which started in January 2018, generated Sh8.4 billion ($84 million) in the year to June, internal performance data from Kenya Railways shows.

Kenya Railway cited reduced limited storage capacity at the Embakasi Inland Container Depot (ICDN), minimum use of the Nairobi Freight Terminal that handles cargo not stored in containers and cost tariff as the reason behind the dismal performance.

“There were several instances when the ICDN facility was congested, which impacted heavily on turnaround of resources and thus contributing to movement of low volumes. Closure of some lines also impacted on loading capacity of trains,” Kenya Railways wrote on the report.

Increased sales from the passenger service grew by 43% to Sh1.76 billion from Sh1.23 billion in 2018.

In its first full year operation to June last year, SGR made revenues of Sh2.4 billion ($240 million), but this was based on a freight operations of six months.

In May 2014, Kenya borrowed Sh324 billion from China to build the line, to be repaid in 15 years, with a grace period of five years.

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