Kenya’s multi-billion worth SGR train first full year earnings axed by almost 50 percent raising fears its report may have been ‘cooked’ to make it appear profitable

Kenya's Standard Gauge Railway
  • Kenya’s Sh320 billion ($3.2 bn) Chinese built Standard-Gauge Railway (SGR) which snakes its way from Mombasa to Nairobi didn’t make half as much money as was earlier announced.
  • The Kenya National Bureau of Statistics (KNBS) has revised downwards the earnings from the standard gauge railway (SGR) in the first full year of operations by 44%.
  • Official data released on Friday showed that SGR generated sales of Sh5.7 billion ($570 million) last year not Sh10.33 billion ($103.3 million) as disclosed in March.

The viability of Kenya’s most expensive and grandest infrastructure project since Independence has been cast in serious doubt. According to reports, its first full year earnings may have been ‘cooked’ to make it appear profitable.

Kenya’s Sh320 billion ($3.2 bn) Chinese built Standard-Gauge Railway (SGR) which snakes its way from Mombasa to Nairobi didn’t make half as much money as was earlier announced.

The Kenya National Bureau of Statistics (KNBS) has revised downwards the earnings from the standard gauge railway (SGR) in the first full year of operations by 44%, raising questions over the accuracy of reports on the performance of the mega project.

Official data released on Friday showed that SGR generated sales of Sh5.7 billion ($570 million) last year on the back of the cargo business. These figures are, however, very different from the numbers disclosed in March which showed SGR generated sales of Sh10.33 billion ($103.3 million) against the annual operation costs estimated at Sh12 billion ($120 million).

KNBS has failed to disclose the reasons behind the downward revision of the numbers by up to 44%, turning the spotlight instead on the tracking and collection of SGR earnings data.

The latest development also signals that the mega project would take longer to break-even.

The new Chinese ambassador to Kenya Wu Peng last week waxed lyrical about the viability of the Chinese funded project using the ‘cooked numbers’.

“We believe SGR is economically viable. Note that in the first year of operations, Mombasa-Nairobi SGR has earned Sh10.33 billion, which is close to the operating cost of Sh12 billion. It’s never easy for a railway project to achieve nearly break-even in a year.

Kenyan and Chinese operators deserve credit for that achievement. China has full confidence in Kenya’s ability to make profits from SGR,” said Mr Peng as reported by Business Daily, a local business publication.

Freight services, which kicked off in January 2018, generated Sh4 billion ($40 million) in the year to December against the initial announcement of Sh8.72 billion ($87.2 million), the KNBS statistics indicate.

The data also shows that China Communications Construction Company, the operator, sold slightly more than 1.66 million tickets, earning Sh1.61 billion ($16.1 million) in revenue during the year.

The income was not enough to meet the operation costs, which were earlier estimated at Sh12 billion ($120 million) a year and as a result it prompted an increase in freight charges and passenger fares for children on Mombasa-Nairobi trains by 100% in a bid to raise more revenue to pay the Chinese operator.

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