The Africa Star Railways (Afristar), operator of the Standard Gauge Railways (SGR) is accused of greed and mismanagement in a mafia-like ticketing scam.
According to the Standard Group, the Solicitor General Kennedy Ogeto has directed Kenya Railways Corporation (KRC) to terminate the operating contract with Africa Star Railways, a China Road and Bridge Corporation (CRBC) company, because of the ‘little benefit’ to Kenyans in the over Sh500 billion project.
The greed that the title of this article speaks about is one which Africa Star Railways ‘artificially fully booked the trains”, which would be a lie because they would go back to sell tickets at premium rates to travellers who were desperate for them. In case there were no buyers of the tickets, the officials would report that there have been cancellations to generate refunds, as a result their exposure to losses was nil. The ticketing scam has made KRC report losses and often announce that it is cash-strapped yet bank account of Afristar swells.
Before SGR was constructed, Kenyan activists and intellectuals had called for the review of the construction, some said the money was too much fr such a project, others said the old Metre Gauge Railways was okay if it just received a little upgrade. However, the govt went on to increase its costs from the previous contract signed by the Raila-Kibaki coalition govt and construction started.
Two to three years down the line, losses are piling and there’s no way Kenya will ever pay the loans if this continues.
SGR gobbles over Sh1 billion per month to run, yet it also makes loses which makes the paying of its loans even more difficult.
Some experts even say, it is better to shut it down alltogether and concentrate on paying the loans because that is better than the Sh1 billion it takes from the taxpayers every month.
The article in the standard laments that “SGR was a super good project for any country, but whose undertaining was never informed by an honest assessment for value”.
It is true the reality of non-perfoming SGR is even more pronounced now with the New line from Nairobi to Naivasha.
David Ndii, Director of African Economics had warned that:
In the beginning was a fiction – that the Chinese railway would freight 22 million tonnes a year, and in so doing, replace the trucking business. Turns out – and this from the government’s own internal assessments – that the maximum amount of annual freight on the SGR is 8.76 million tonnes, almost a third of what was promised. Interest alone on the $3 billion debt is in US$200 million (KSh 20 billion) per year, which works out to KSh 45,000 – KSh 60,000 per container. Contrary to official assurances, the railway will require both State coercion and a massive public subsidy to stay in business.
The SGR contract leaked early this year exposing the greed.
Many other blogs have taken up the story and run with it. For example these ones here below that states, the SGR had more items that were overpriced, another states that the Environmental Social Impact Study was overrated with only a few attendees, the other revealed more about the Billion shillings grass.
The Standard Group editorial firm words echo a stance never seen before in Kenyan media.
Ogeto should be supported in ensuring that either the operator stops frustrating Kenya Railways in its bid to enter a new contract on revised terms or the Corporation severs the ties and plunges to the deep end to manage the pricey infrastructure. Given that we have already committed our country to repaying the Chinese loans extended to fund the construction of the railway, there is no need to keep the country ensnared in an abusive marriage where Kenyans are collectively and continuously fleeced in a bad deal entered years gone by.
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