How State blunders are costing taxpayers billions

The Report by the Joint Technical Committee on the Improvement of Efficiency and Cost-Effectiveness of Transportation of Cargo Using SGR suggests that no transporter will opt for the new rail against road unless the State arm-twists them.

The Government has admitted that the Standard Gauge Railway (SGR) is a hard sell to businesses, as it costs twice as much to ferry cargo by rail than by road.

The report shows that Government figures have only been capturing the headline figure while avoiding the cargo handling costs that make using the Mombasa-Nairobi cargo service an expensive option.

While it costs Sh50,000 ($500) to move a 20-foot (ft) container from the SGR terminus in Miritini to the Inland Container Depot (ICD) in Nairobi, costs associated with the handling and storage of cargo at the port tend to push up this cost by more than 100 per cent, which in effect sees cargo owners part with a total of Sh142,000 ($1,420).

This is in comparison to road transport where cargo owners would pay truckers Sh65,000 to have a similar 20-foot container moved from Mombasa to Nairobi. A 40-foot container costs Sh85,000 by road.

“The difference between road and rail for 20-foot and 40-foot containers amount to Sh77,000 ($770) (118 per cent increase) and Sh127,000 ($1,270) (149 per cent increase), respectively,” says the report.

The additional costs are incurred due to re-marshalling, storage and demurrage.

Additional costs are also met on the price of empty return by rail, shipping line margins and Kenya Ports Authority (KPA) shunting of empties to container depots.

The multi-stakeholder team looked at road transport, which has in the past been faulted as being costly to cargo owners while increasing congestion on roads and contributing to high wear of roads.

It also evaluated the SGR, which has in the past been termed as a cheaper and faster alternative – but other costs of handling cargo were not factored in before concluding that transport on the railway was cheaper.

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