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Kenya: Kenya Railways Tipped On $1.5b Overhaul
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East African Business Week (Kampala)
12 May 2008
Posted to the web 12 May 2008
Samuel Otieno
Nairobi
Kenya Railways has finally unveiled plans to overhaul the country's dilapidated rail network setting in motion plans to raise the required project funds and given hope to the business community of a reduced tariff rate once the modernization programme is complete in 16 years.
The corporation, synonymous with poor services and low returns in the past, announced last week its readiness to replace the colonial relic in Kenya and bring it to international standards and in tandem with the current economic growth and particularly the transport sector in the East African region.
A plan produced for the consumption of stakeholders in the rail transport sector envisages Kenya railways pulling up its performance to conform to global trend where greater inter-city goods and passengers traffic moves by train as exemplified in Europe.
The grand project estimated at US$1.5 billion (Shs 93 billion), promises a world- class speed train infrastructure whose results would include low prices that in turn promises to fuel both social and economic growth within the common market for Eastern and southern Africa (COMESA) region.
Underpinning this point is that Kenyans will for the first time ever have the choice of traveling in comfortable electrified trains at whirlwind speeds of between 120-160 kilometers per hour.
This would mean scaling he 1,100 kilometers distance from Mombasa to Kampala in less than 10 hours, to mention the smooth carriage of human traffic during the rush hours, at conveniences never witnessed before in rail transport. It would also mean the possibility of relocating the city's populace to the outskirts.
The plan as outlined in the strategy paper Kenya Railways Vision 2050 is expected to cost an average of shs 6.6 billion annually, to the next 16 years of continuous implementation.
Kenya railways Vision -2050 suggests hat the work on the rail infrastructure, first laid in 1886, commences immediately if the envisaged smooth, faster and safe operations are to be in place b the end of the Rift Valley Railways (RVS) concession in 2031.
The project will involve the laying of an entirely new line (standard gauge) to replace our antiquated 2,156 kilometers of railways.
KR also proposes an additional 1,024 kilometers within Kenya to open up the northern districts that will be connected from Lamu through Bura, Garissa onto Archers post , Maralal, Lodwar and finally Lokichogio on the sudan border.
Feeder lines would also be constructed from Nairobi to Garissa and Nairobi through Nanyuki, Archer's post which the plan notes could be an important railways junction with a possibility of becoming a future industrial hub.
East Africa's railway system which is dominated by Kenya currently is seen as a logistical nightmare wose cost is said to be about 30-40% higher than the global
Average, to the exasperation of the private sector.
Thus the prospects of immediate benefits like the anticipated tariff reduction to jus 70 cents for every tone per a kilometer from the present Shs 2.50 has driven the private sector to embrace the project with open arms
A train average 45 containers compared to a trailer truck that at best can only take two loads. To meet demand it therefore means there are at least 50 trucks on the roads at any given time.
Assuming they are traveling from Mombasa to Kampala, each truck will in turn consume an average three thousand litres of diesel fuel, equivalent to what a single locomotive would require for the entire distance.
The trucks with a two driver crew and a turn boy would perhaps require paid up security and immense maintenance costs given the poor state of our roads.
Since 90% of all cargo in the region currently moves by road, this indicates the gross and unnecessary expenses that could be saved by speedier evacuation of container loads.
A compressed lead time would also decongest the transit ports of Mombasa and Nairobi internal container depots (ICD} while creating much needed jobs at the Kisumu ICd and Eldoret which despite having cost over Shs 500 million to build is sill grossly under utilized.
According to the Kenya ports authority (KPA), the performance of the rail sector has been declining from 13% in shipping lines connecting t over 80 ports world wide. In 2007it registered container traffic 585,367 TEU's (Twenty foot equivalent Units). Out of this 71% was domestic cargo with 26.6 and 3 percent on transit and trans-shipment respectively with cargo traffic growing by 34 percent since 2002.
Plans are under way to increase this 7.8 million TEUs by 2020 and up to 60 million by 2050 hence the need rehabilitate the railway connection in the country to meet the anticipated regional demand.
Though a financial plan has not been developed from the project, Kenya Railways managing director Nduvu Muli said the corporation was open to many options available such as the capital markets where it could float a bond, raise an Initial Public offer Offering (IPO) or even do a build-own transfer (BOT) scheme.
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He said the old railway line could also be harnessed for boost trade in the tourism sector since most of it passes through various national parks. Proposals have been tabled to KR to use it as a tool fort tourism where the old steam trains could be revived and given to the Kenya Wildlife (KWS) in various national parks.
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| Copyright © 2008 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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