Kenya to upgrade Railway Network for US$2.4 bn
THE KENYA RAILWAYS CORP.is to upgrade its 100 plus year-old narrow gauge rail network, replacing it with a modern standard gauge system. The ground breaking ceremony for the five-year project will be conducted before the end of the year, said the chairman of the Vision 2030 delivery Secretariat, Dr. James Mwangi. Dr. Mwangi is also the Chief executive of Equity Bank
The project involves building a 1300KM long Standard Gauge railway line from the Port city of Mombasa to Malaba border on the border with Uganda,. It will also have a branch to Kisumu city on the shores of Lake Victoria. The Uganda Railway line build in the last century by the colonial administration is in the Northern Transport Corridor in eastern Africa which serves several land-locked countries in the region. These are: Uganda, D R Congo, Rwanda, Burundi and South Sudan. In some instances, it also serves northern Tanzania and Somalia.
However, the ancient railway network has, over the years, been a major draw-back to economic progress in the region and a major cause of the high cost of transport in the region. The system is inefficient as its top speeds hardly exceed 50KM an hour. Consequently, passenger and freight transport have shifted to road transport, which is expensive and dangerous.
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The port which is the gateway for five landlocked countries in addition to Kenya has a capacity for 20 million tons. It now operates at almost full capacity having handled 19.93 Mt in 2011. Its container capacity is also stretched thin. Last year, it handled 711,000 TEUs. As result, the port is investing in capacity expansion, but its growth could be chocked by inefficient Railway and roads links to the hinterland.
The investment in the modernization on the Northern corridor is therefore a critical input into the survival of the Port of Mombasa. Reliable sources have indicated that Uganda, which shares a common rail link with Kenya, is also considering upgrading its railway network in sync with Kenyan development.
The upgrade to be built by the Chinese firm, China Road and Bridge Corporation, will cost a whopping US$2.35 billion and will last five years. It is funded by the Chinese government.
Media reports in Kenya last week indicated that the Chinese have demanded that the new rail road be de-monopolized to allow more than one operator to transport Cargo and passengers on the network. Currently, a company called Rift Valley Railways, RVR, is the sole concessionaire on the network.
However, experts indicate that upgrading the rail network does not amount to breach of contract. They point out that RVR’s contract has survived because of the generosity of both Kenyan and Ugandan governments. The firm has not met any of its contractual benchmarks since it began operations in 2006.
Given that the firm was under –capitalized, it may not provide the level of services needed to support economic growth in the region. The region, which is also becoming an oil producing region, is expected to post growth above 5.0 per cent into the near-future. This, coupled with the policy paradigm shift in Kenya calls for competition on the line.
Kenya has shifted its operations and maintenance policy towards making users pay for use of infrastructure. This will enable the country to maintain and operate roads and railroads and even servicing the debts incurred to build the infrastructure, with depending on the treasury.
A Feasibility study seen by this publication proposes that concessionaire on the proposed Lamu- Juba Railway line pay a lease charge of the track of US$343 million a year. This proposal implies that the line can be leased to multiple operators. It also implies that operators will be expected to bring in their own rolling stock.
The study suggests 78 trains will ply the Lamu-Juba Line per day- 74 freight trains and 4 passenger trains. Analysts say that, such a huge number of engines and wagons cannot be supplied by one operator. Multiple operators, each supplying their own stock are a viable option to support the expected robust growth in the region.
A similar robust demand is also expected on the Northern Corridor which is now served by an estimated 10,000 heavy commercial trucks. RVR’s concession says experts, was for the operation of rolling stock previously owned by Kenya Railways and Uganda Railways. It does not preclude other operators running their own rolling stock.