Sunday, October 20, 2019

Kenyan Railways

Kenya's government trumpets the opening of its new, Chinese-built train line to the Rift Valley, critics say the railway serves little purpose and is plunging Kenya into massive debt. 

It's been lampooned as the railroad to nowhere – 120 km (75 miles) of gleaming new railway tracks that snake from the capital Nairobi, climb the trenches and escarpments of the Central Rift Valley to stop dead at a remote village.  The end of the new Nairobi-Naivasha line is Suswa in Maai Mahiu county, a region dominated by nomadic Maasai herders, who bring their cattle and sheep to graze here on the valley's fertile floor. The second phase extends the first 385 km of track from Mombasa to Nairobi, which was completed in 2017 for a cost of $3.2 billion.  Originally, a phase three was also planned. This would continue the SGR line from Naivasha through Kisumu, a port on Lake Victoria, onto the Ugandan border town of Malaba. This phase three section of the track is seen as critical because it would link Mombasa, East Africa's biggest port, with the landlocked countries of Uganda, Rwanda and South Sudan – giving them a faster and more reliable route to Mombasa's port than the overburdened roads. But in a blow to Kenyatta, China announced in April that they wouldn't bankroll the $3.7 billion railway extension from Naivasha to Uganda. 
"China shied away from the extension because they had questions about its commercial viability," said John Mutua, an economist at the Nairobi-based Institute of Economic Affairs. 
Critics of the Nairobi-Naivasha line though say it is unlikely to attract many travelers because it fails to connect any significant population centers with Nairobi.  The line was originally intended to haul freight – but it will only open up to cargo in a few months. Critics also worry that there won't be much cargo to carry. The government planned to build a special economic zone nearby offering tax breaks and cheap power as a way of encouraging cargo transport along the new line. But fights over compensation for the land have resulted in massive delays. With construction on the industrial park yet to start, there is expected to be little demand for cargo services in the near future.

The $1.5 billion (€1.35 billion) stretch of track, built and funded by the Chinese, is the second phase of a flagship railway project intended to link Kenya's port city of Mombasa with the Ugandan border. Commonly referred to as SGR from the abbreviation of Standard Gauge Railway, the railroad is a pet project of President Uhuru Kenyatta, who sees it as central to Kenya's Vision 2030 to transform Kenya into a middle-income country. The SGR is supposed to slash freight haulage costs, cut travel times and boost Kenya's rural economy. Kenyatta inaugurated the SGR railway's second phase on Wednesday with the line officially opening to passengers on Thursday. 
The railway has had difficulty attracting cargo because it is more expensive hauling freight by road. Reuters puts the cost of trucking a container from Mombasa to Nairobi at about $800, whereas the railway costs $1,100 – mainly due to extra charges for moving goods from the inland depot in Nairobi.

As a result, the SGR is moving less than half of the freight it needs to carry per year to make it profitable. In its first full year of cargo operations (to May 2019), it generated $57 million in sales, far below the annual operating costs of $120 million and much lower than original projections, according Kenya's Business Daily news site. 

There is one bright spot: the Mombasa-Nairobi line has proved a hit with travelers because of its speed and comfort. The smooth train journey takes around 4.5 hours compared what can be a 12-hour, bone-rattling trip by road.

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