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Kenya: Govt to Spend Close to a Billion U.S. Dollars on New Trains, Railway Overhaul

The government has reportedly announced plans to invest about U.S.$731 million to revamp the Nairobi-Mombasa standard gauge railway (SGR), build new sidings, and buy more locomotives and wagons in the next three years.

The government hopes the country’s most expensive piece of infrastructure will help to grow the economy and improve the standard of living for Kenyans.

A report by the National Treasury shows that the country’s transport ministry will receive an additional U.S.$714.7 million for the “Development of Standard Gauge Railway” between July 2023 and June 2026. This decision will boost the total spending on the SGR project to over U.S.$5.7 billion by June 2026, reports revealed.

The rest of the funds, which have been allocated under the “Mombasa to Nairobi SGR” will largely be used to build new feeder lines and rehabilitate the old metre gauge railway (MGR) lines, reports The East AfricanCharged at the rate of 2%, the Railway Development Fund (RDF) is reportedly levied on all goods imported into the country for home use.

The East African further reports that, in the next 12 months, the government will also build a new 2.8-kilometre Metre Gauge Railway (MGR) link from Mombasa SGR Terminus to Mombasa MGR station at a cost of U.S.$18.29 million. These funds will also be used to construct a railway bridge across the Makupa causeway that links Mombasa Island to the Kenyan mainland.

Budget allocation

U.S.$11.7 million – New Metre Gauge Railway (MGR) line linking the Naivasha Inland Container Depot to the existing Longonot Railway Station

U.S.$2.93 million –  Construction of a Railway Metro Line connecting Athi River Station to the East African Portland Cement

U.S. $3.3 million –  a figure that is set to increase to U.S. $11.4 million and U.S. $13.83 million in  2024/25 and 2025/26  –  Another Railway Metro Line connecting Athi River Station to NSSF and Mavoko

Rehabilitating the line between Longonot and the Western border town of Malaba, which is aimed at facilitating the movement of cargo from the port city of Mombasa to Uganda

U.S.$3.45 million  –  State plans to build Malaba Cargo Handling Yard  in this border town

U.S.$27.8 million  in the next fiscal year, U.S.$8 million  in financial year 2024/25 and U.S.$4.4 million in the financial year 2025/26  –  Other spending items will be the acquisition of plant and equipment

U.S.$8.23 million –  Logistics hub is planned for Athi River

U.S.$87 million –  Acquiring rolling stock that will be used to ferry cargo on the SGR from Mombasa to Naivasha

In 2022, towards the end of his tenure, Kenyatta urged the new administration of William Ruto to use debt – emphasising its importance – as a key accelerator of economic development – to build Kenya’s economy.
The former president borrowed about $4.8 billion in three tranches for the construction of the two phases of the SGR, contributing to a major build-up of Kenya’s stock of debt, according to The East African.

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