0 Replies Latest reply on Oct 12, 2018 1:23 PM by Jerry Rawlings Mbabali

    SGR project makes $99 million loss in the first year of operation in Kenya

    Jerry Rawlings Mbabali


      Selon les derniers chiffres du ministère des Transports, le Standard Gauge Railway (SGR) a perdu 99 millions de dollars au 
      cours de sa première année d'exploitation au Kenya. Les documents déposés par le secrétaire du Cabinet des Transports et de l'Infrastructure,
      James Macharia, devant la commission des transports de l'Assemblée nationale ont révélé que le chemin de fer construit en
      Chine avait subi une perte moyenne de 7,4 millions de dollars au cours de l'exercice 2017/18, en grande partie à cause du trafic de fret.


      The Standard Gauge Railway (SGR) made a $99 million dollar loss in its first year of operation in Kenya, according to the latest figures from the Ministry of Transport. Documents tabled by Transport and Infrastructure Cabinet Secretary James Macharia before National Assembly’s Transport Committee revealed that the Chinese-built railway averaged a monthly loss of $7.4 million in the 2017/18 financial year largely as a result of low cargo business. However, the Government projects that the railway will make a profit of $50 million between now and June 2019, averaging $4.2 million earnings per month. “Part of the reason we made the loss last year was that it was a bit difficult to convince people that the railway was good for their cargo businesses,” said Mr. Macharia. “Also, we were in operation for only six months from June 2017 and we were only trying the waters.”

      The SGR expects to haul close to nine million tonnes of cargo compared to 990,488 tonnes carried in the last financial year. Macharia said if the SGR does not break even by the 2019/2020 financial year - when the loan repayment to the Chinese government is scheduled to begin - then the exchequer will have to pay from the newly established Railway Levy.

      Kenya signed a $3.2 billion deal in May 2014 with China’s Exim Bank, comprised of $1.59 billion commercial loans and $1.61 billion concessional loans, to build the modern railway between Mombasa and Nairobi.

      The loan, whose interest is 3.6 percentage points above the six-month average of London Inter-Bank Offered Rate (Libor) - which serves as an international benchmark - is to be repaid in 15 years. Macharia said eight cargo trains were making daily trips to the Port of Mombasa, and the Government was aiming to have 12 trains at year end. When questioned about under-utilization of the cargo trains by Committee Chairman David Pkosing, with some of the wagons going back empty, the CS said the Government was in talks with major private sector players such as the Kenya Tea Development Agency and Unilever to see how the trains can be used in a more effective manner. The Government projects that SGR will turn in a profit of $157 million in the 2019/20 financial year.





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