Kenya’s flagship Chinese-funded railway project has registered losses of sh 10 Billion in its first year of operation.
Documents tabled by Transport and Infrastructure Cabinet Secretary James Macharia before National Assembly’s Transport Committee yesterday revealed that the highly publicized project averaged a monthly loss of Sh750.7 million. The losses have been blamed on low cargo business.
The news comes in the wake of another damning revelation that Kenyans working for the company have been facing discrimination, harassment, corruption and underpayment. 102 students trained on SGR operations at the Railways Training Institute accused the China Road and Bridge Corporation (CRBC) of mistreating them.
The team also accused the Kenya Railways Corporation (KRC) and the Standard Gauge Railway Oversight Authority of “failing in their mandate” after they raised the matter only to be given empty promises. They accuse the CRBC human resource boss Navy Wang of demeaning them by saying that, “You Kenyans are very many and desperate for jobs, so this is a favour we are doing you”.
Kenyan workers quoted in various media publications reported unfair labour practices and racial discrimination, something that has sparked a heated debate. The workers are also reported to be protesting a new secrecy code which they said was designed to muzzle them. The damning allegations have since been dismissed by Government spokesperson Eric Kiraithe
The railway, which links the coastal city of Mombasa to the capital Nairobi, was funded by a $3bn loan from China’s Exim bank, to be repaid over 15 years, the BBC reported.
It is estimated that China owns 70% of Kenya’s debt, according to Business Daily newspaper.
The government has dismissed concerns that the railway is overpriced and unsustainable, but Macharia told a parliament committee this week that the state is looking at how private industries can make rail transport more economically viable.
While passenger trains get fully booked regularly, the minister said it was hard convincing businessmen to switch cargo transportation from road to rail. He added that the state was now discussing with major private industries on how to make rail transport more viable.
However, the Government projects that the railway will make a profit of Sh5.08 billion between now and June next year, averaging Sh424 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.
The project was a key part of president Uhuru Kenyatta’s re-election campaign, launched a few months before the vote last year. Repayments begin next year. If the railway project does not break even, Kenyan taxpayers will have to pay, the BBC reported.