Private firm to fund Sh21bn old rail link to SGR

Private contractors will finance the upgrade of the old metre gauge railway (MGR) between Naivasha and the Malaba border and also+ build a new line connecting to the Standard Gauge Railway (SGR) at a total estimated cost of Sh21 billion, Transport Secretary James Macharia has said.

The public-private-partnership contract will help the government to avoid borrowing more loans while ensuring that there is a reliable railway connection between Naivasha and the Ugandan border for onward connection to Kampala.

Kenya dropped its bid to extend the SGR to Kisumu and later on to the Ugandan border after failing to secure a multi-billion-shilling loan from China, which funded the first and second phases of the new railway line.

Mr Macharia Wednesday said the government’s priority now is to upgrade the old metre gauge railway and connect it to the SGR through construction of a new road and rail link from Maai Mahiu to the Naivasha MGR station.

Upgrading the old Naivasha-Nakuru-Eldoret-Malaba line will cost an estimated Sh15 billion ($150 million) while building of the Mai Mahiu connection will cost about Sh6 billion ($60 million).

The upgrade and construction of the connection is expected to start in the next three months.

“Private sector would be much faster because you know it is the financing agreements that take longer but if you have ready funding from the private sector then we just engage them within our existing Public Private Partnership arrangements. We concluded the deal for the expressway from Mombasa in two months so it is possible,” said Mr Macharia Wednesday.

Transporters will truck cargo through the Maai Mahiu–Narok road to the Naivasha MGR station before completion of the 43-kilometre railway line between the old and the new railway stations.

The upgrade and construction of the connection is expected to start by about August, in time for the planned launch of the Nairobi-Naivasha SGR line.

Mr Macharia made the announcement yesterday after hosting a delegation from Uganda led by the minister for Works and Transport, Monica Azuba.

There has been concerns that the Mombasa to Naivasha SGR, which cost an estimated Sh477 billion, would not be economically viable if it is not connected to Kampala which is a major user of the Mombasa Port for its imports.

The Ugandan team whose trip is a follow up to the March 2019 visit by President Yoweri Museveni – during which the SGR talks took centre-stage — expressed concern over a possible rise in transport costs should the trucking between the two railways lines last for long.

“There is that gap but I hope we will work out modalities to see that our transporters would not get disadvantaged both in terms of cost and time in trans-shipping between the metre gauge railway so that it is a win-win situation for both of us,” said Ms Azuba.

Mr Macharia later told the Business Daily that the link to the MGR will result in time savings for Uganda-bound cargo, hence will compensate for any cost increases that may result from the trucking.

He said the government will engage Uganda to address possible cost implications by offering discounts should there be need to do so.

The Narok road will also have to be upgraded to allow for the many trucks between the old and the new railway, pending construction of the new railway link which is expected to take more than one year.

The CS who last week said both the Nakuru–Malaba and Nakuru-Kisumu MGR lines would be revamped, Wednesday said upgrade of the old Kisumu line may not be viable after all.

According to him, the line has ‘several bridges that are vandalised’ and may turn out to be a costly affair considering that the government still has plans to complete the SGR line to Kisumu where the port is to be also upgraded.

Uganda is also said to be working on the reconstruction of the Metre Gauge Railway line from Malaba to Kampala with funding from the European Union.

The upgrades for the two lines, Malaba-Kampala and Tororo-Gulu, will cost the country some Sh18 billion.

Kenya already offered to give Uganda land to construct an inland depot in Naivasha, a key mission for the delegation currently visiting the country.

The renewed focus on the metre gauge railway line now dims hopes for the fast-tracking of the Chinese-funded SGR which was expected to reach Kisumu by 2022 and link to a sea port for shipping of cargo to Uganda.

Focus on private sector funding by the government presents a shift on mega infrastructure funding which has been blamed for the ballooning debt pile for Kenya.

Last month, a Kenyan delegation in Beijing attending the Belt and Road Forum returned empty-handed after it emerged that plans to secure the billions needed to complete the SGR to Kisumu had hit a deadloc