The operating costs of the Standard Gauge Railway (SGR) have been high with the huge burden of losses laying on taxpayers’ shoulders.
The national assembly now wants the SGR operating costs cut by half and the terms of the loan taken to finance its construction renegotiated.
The Transport committee of the National Assembly said the current huge operating losses on the SGR, coupled with the Chinese debt repayment obligations, warranted an urgent review to protect taxpayers already strained by the economic fallout due to the Covid-19 pandemic.
“The committee recommends that renegotiation on the current Operating Agreement by planning to reduce the operation costs by at least 50 percent be initiated by the government,” the committee said in a report following an inquiry into the use of the SGR.
“The government should initiate the process of renegotiating the terms of the SGR with the lender due to the prevailing economic distress occasioned by the effects of Covid-19, the global pandemic that has affected the world’s economic growth.”
The SGR posted a combined operating loss of Ksh 21.68 billion in the three years it has been operational to May 2020. It has not been making profit with taxpayers having to cover for this.
Taxpayers spend an average of Sh1 billion per month on the operations of the Chinese-built Mombasa-Nairobi railway. However, the cost could rise up to Sh1.8 billion due to variables such as the price of lubricants and fuel, loading and unloading fees, maintenance charge and various other management fees.
The operation loss has already caused the Kenya Railways Company (KRC) to default on an estimated Sh40 billion payout to Africa Star.
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