How mysterious company was secretly given multibillion deal to run SGR

Details of local shareholders are unavailable at the registrar of companies

Africa Star Railway Operation Company: mysterious company secretly awarded multibillion contract  to run SGR

Details have emerged on a mysterious company with unknown Kenyan shareholders that was given a multibillion deal to run the Standard Gauge Railway (SGR) for ten years beginning June 2017 when the first passenger train was launched.

The initial agreement between Kenya and China was that the Chinese-owned China Road and Bridge Corporation (CRBC) was to run the SGR for the first ten years before handing it over to the Kenya Railways.

The Nation on Sunday reported that a secret contract was signed a few hours before President Uhuru Kenyatta launched the Madaraka Express Mombasa-Nairobi train on May 31, 2017.

The secret deal transferred the operationalisation of the SGR from CRBC to Africa Star Railway Operation Company Ltd.

CRBC is the majority shareholder in Africa Star, although the other shareholders remain unknown and reportedly have no records unavailable at the Registrar of Companies in Nairobi.

The arrangement paint a picture of a lucrative deal for the shadowy faces at African Star – including a requirement barring Kenya Railways from making details of the contract public.

For starters, the SGR operator was entitled to Sh13.3 billion in the first six months of running the train with the contract specifying higher fees as the number of trains increased.

Despite the high earnings, the SGR operator is cushioned from almost all liabilities and is only required to pay for repair bills that do not exceed Sh100,000 and line maintenance of not more than Sh5 million per year.

Already, Kenya Railways is reported to be disputing a Sh30 billion bill sent by the operator for the running of two VIP trains – even though the annual revenue from the SGR is reported to be around Sh6 billion.

The Operator has charged for two VIP trains in the 4th quarter. KRC is of the opinion that the two VIP trains operated as E2&E1 do not qualify for Variable Services Payment charges. Using VIP coaches on normal train operations does not necessarily translate to a VIP train service. We recommend that the operator withdraws the payment request and revise appropriately,” KRC wrote.

The new development adds on to the many hurdles facing the Sh320 billion SGR project that has Kenya servicing a debt of nearly Sh400 billion.

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