Kenya’s forgotten white elephant project, Standard Gauge Railway (SGR) made losses in its second year of running atributed to higher opearing costs.
SGR which is run by China Communications Construction Company (CCCC) raked in sh13.5 billion against Sh18 billion per year.
In its first year of operation, the SGR made a Sh9.89 billion loss in its first year of operation, mainly attributed to low cargo business by the Ministry of Transport.
The operating costs for 2018/2019 rose to 18 billion as compared to the first year’s of Sh13 billion.
According to Kenya National Bureau of Statistics (KNBS) , the revenues were largely driven by a jump in income from freight services, which began charging commercial rates after the end of promotional tariffs in 2018 while increased use of first class tickets in the passenger service compensated for fewer journeys, official data show.
KNBS data indicate that SGR generated sales of Sh5.7 billion in 2018, reflecting a 136 percent rise in growth.
The revenues were not enough to meet the operation costs, which are estimated at Sh1.5 billion a month or Sh18 billion a year.
“The substantial increase in revenue from freight transport is partly explained by use of normal tariffs in 2019 compared to promotional tariffs in 2018,” said the KNBS.
Income from the rail line is required to meet the loan repayments to China, which began in May last year after a five-year grace period. The government borrowed Sh320 billion to build the line.
However, Kenya is planning to take on more debt to speed economic growth. Last year, the government lifted its cap on public debt in order to restart work on some stalled infrastructure projects.
At present the county’s debt to GDP ratio stands at about 60%, but this can increase to 100% under new rules.
Plunder
Kenyans recently got preview of the plunder that went on after the Nation Media Group (NMG) published that sh1 billion alone was used to buy and plant grass.
In an article published by the Daily Nation on Tuesday, February 25, the government stood accused of exorbitant use of the SGR funds.
The Daily Nation wrote;
The beautiful grass dotting the Standard Gauge Railway (SGR) stations and some sections of the line cost the taxpayer Sh1 billion.
And when Kenyans were fed the narrative that the Chinese contractors were living in temporary containers, the reality was that they were earning top dollar and living large behind the walls of the SGR.
The airtime allowance for the lead engineer was Sh5 million, for the three years the project was under construction. Even if the China Road and Bridge Corporation (CRBC) engineer was on phone 24 hours every day for the 36 months, the airtime would never have been exhausted.
His house was furnished at a cost of Sh3 million and office computers bought at Sh280,000 each, while his laser jet printers cost a staggering Sh513,700 each. In total, the taxpayer forked out Sh57 million to provide office furniture.
Additionally, Kenyans spent Sh239 million to provide entertainment for the expatriate staff during their time in the country.
These details are just the tip of the iceberg. We can now lift the lid on why Kenya’s railway ended up being one of the most expensive on the continent.
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