Kenya Insights

Tag: Standard Gauge Railway (SGR)

  • Tanzania Receives 264 Chinese Cargo Wagons for SGR Electric Train Service

    Tanzania Receives 264 Chinese Cargo Wagons for SGR Electric Train Service

    Tanzania is edging closer to commencing cargo transportation through its ambitious standard gauge railway (SGR), following the arrival of 264 freight wagons at the port of Dar es Salaam on 24 December 2024.

    The Tanzania Railways Corporation (TRC) confirmed the development in a public announcement, describing it as a significant milestone in the country’s efforts to enhance its transportation infrastructure and support economic growth.

    The wagons, manufactured in China by CRRC, are part of a larger consignment of 1,430 units ordered under a contract aimed at equipping the SGR with state-of-the-art freight solutions.

    This latest shipment comprises 200 wagons designed for containerised cargo and 64 for loose goods transportation.

    Upon completion of offloading, the wagons will undergo rigorous testing to ensure their readiness for operations.

    According to TRC, these trials will verify the performance of the wagons and the railway system, with the wagons set to operate at speeds of up to 120 kilometres per hour.

    Speaking on the arrival in Dar es Salaam, TRC’s head of public relations, Mr Freddy Mwanjala, said the trials would involve collaboration between TRC experts and contractors to ensure all performance metrics meet contractual standards.

    He assured the public that the corporation would announce the official start of operations once the trials are completed successfully.

    “This is a significant achievement in our journey towards operationalising the SGR for cargo transportation. The trials are a crucial step in ensuring safety, reliability, and efficiency,” said Mwanjala.

    The wagons are expected to revolutionise cargo transportation in Tanzania, offering a faster and safer alternative to road transport.

    Analysts believe the SGR’s operationalisation will reduce logistical costs, enhance trade competitiveness, and ease congestion on the country’s road network.

    The arrival of the wagons follows a November announcement by TRC that the production of the 264 units had been completed. The ship carrying the consignment departed from China’s Port of Dalian on 12 November.

    The SGR is a key pillar of Tanzania’s economic development strategy, designed to improve the movement of goods and people domestically and across borders.

    Once fully operational, it is expected to play a central role in facilitating regional trade through connections to neighbouring countries, including Rwanda, Burundi, and Uganda.

    The SGR freight service promises to provide much-needed relief to Tanzanian businesses, particularly in reducing delays and costs associated with road transport.

    For containerised goods, the 200 specialised wagons are seen as a game-changer, allowing seamless transportation of goods from the port to inland regions and neighbouring countries.

    Additionally, the 64 wagons designated for loose cargo are expected to benefit industries such as agriculture, mining, and construction, enabling the efficient movement of bulk commodities.

    The new railway system, which incorporates modern safety and performance standards, aligns with Tanzania’s aspirations to position itself as a transport hub in East Africa.

    As the countdown to the commencement of cargo services begins, stakeholders are optimistic that the SGR will usher in a new era of economic transformation for the country.

  • Petition Seek To Probe China Roads and Bridge Corporation In SGR Sh777B Overpayment

    Petition Seek To Probe China Roads and Bridge Corporation In SGR Sh777B Overpayment

    A petition has been filed in the Senate to establish why Sh777 billion was overpaid to China Roads and Bridge Corporation (CRBC), the suppliers of facilities and rolling stocks during the construction of the Standard Gauge Railway (SGR) by the State department for Transport.

    This even as the State department is said to have allocated Sh97.3 billion for the construction of the Mombasa – Nairobi SGR seven years after the completion of the project.

    A petitioner, Bernard Muchere in his documents tabled before the Senate wants the lawmakers to also establish the authenticity of the amount spent to develop SGR, which he claims was aggregated to Sh1.18 trillion notwithstanding that the contract sum was Sh407billion.

    “The amount spent to develop SGR aggregated to Sh1.18 trillion notwithstanding that the contract sum was Sh407 billion indicating that China Roads and Bridges and the suppliers of facilities and rolling stocks were overpaid by Sh777billion,” reads part of the petition.

    According to Muchere, the SGR project was schemed by China Road and Bridges Corporation which benefitted the Chinese at the expense of Kenyans.

    Establish authenticity

    He further wants the Senators to establish the authenticity of Sh63.9billion expenditure by the National Treasury for the development of Nairobi-Naivasha SGR, whereas work on that part of SGR was completed and commissioned in December 2019.

    “The petitioner prays that the Senate intervenes in this matter with a view to undertake an inquiry into the inconsistency in financing the SGR project between the National Treasury, State Department of Transport and Kenya Railways Corporation,” reads part of the petition.

    Muchere who is a Fraud Risk Management Consultant further alleges that the SGR project did not meet the criteria for a public project neither did the contract and related debt qualify as a public contract and public debt.

    Muchere avers that the National Treasury debt register shows three loans 2024006, 2014008 and 2015023 aggregating to Sh466.41billion ($5.08billion) from Exim Bank of China.

    Aggregate receipt

    In addition, KRC in its financial statements shows aggregate receipt of Sh539.27billion loans as of June 30, 2020 from the Exim Bank of China and the State Department of Transport in its Appropriation Act (Budgets) upto the June 30, 2021 financial year shows Appropriation in Aid (AIA) aggregating to Sh387.9billion from the government of China.

    Muchere in his petition argues that there is inconsistency in loans relating to the SGR as reflected in the books of the National Treasury, State Department of Transport and Kenya Railways Corporation (KRC) in terms of the lender and the amount.

    Muchere in his petition argues that the development appropriation Acts (budgets) for 2015/2016 to 2020/2021, the aggregate expenditure estimates relating to SGR from Mombasa to Naivasha were Sh604.3billion comprising direct payments (AIA loans) of Sh436.9billion and Sh159.9billion receipts not classified and Sh7.5billion exchequer issues.

    The petitioner also contends that there appears to be two types of loans, one from Exim Bank of China aggregating to Sh544.2billion ($5.08billion) and the other Sh387.9billion from the Government of China, asking the lawmakers to seek clarification on which lender betweent the Exim Bank of China and the Government of China extended SGR credit facilities.

    “The alleged loan of $5.08billion from the Exim Bank of China to fund the SGR project was not paid into the Consolidated Fund contrary to Article 206 (1) of the Constitution, instead ‘Forms of irrevocable  notice of drawdowns’ substituted for payment of loan into the consolidated fund,” the petition reads in part.

    China Road and Bridge Corporation (CRBC), a subsidiary of Fortune Global 500 company China Communications Construction Company (CCCC)

  • Lobby Group Sues State To Have Secret SGR Contract Details Made Public

    Lobby Group Sues State To Have Secret SGR Contract Details Made Public

    Okoa Mombasa and the Institute for Social Accountability (TISA) will today file a petition with the High Court seeking to obtain all contracts, agreements and studies related to the construction and operation of the Standard Gauge Railway (SGR).

    The KES 450 billion (USD 4.2 billion) SGR is the most expensive infrastructure project in Kenya’s history, and was financed mostly via loans through the Export-Import Bank of China. According to government statistics, the SGR has operated at a financial loss since its inception – meaning its operations are not generating funds to help pay back the loans as planned.

    Despite the enormous cost to Kenyan taxpayers, agreements and studies related to the project and its financing have never been made public.

    The petition argues that the Constitution prohibits confidential contracts for public infrastructure projects, which by law require public participation and accountability. Keeping such contracts confidential, the petition states, is a violation of several Constitutional articles related to access to information, public finance management and transparency in governance.

    “Our taxes are funding the SGR,” said Okoa Mombasa member Khelef Khalifa, who served as one of the petitioners for the court filing. “We have a right to know the details of the project: how our money is being spent, the consequences of a loan default, and the government’s decision-making processes in signing the deal. Right now, we know none of this – the Kenyan public is completely in the dark.”

    Okoa Mombasa believes that publicly releasing the contracts will foster more informed public participation and debate around the SGR and its impact, as well as more accountability and openness in public finance. The latter issue is particularly important, given the Kenya’s growing and increasingly unsustainable public debt. The country’s current debt is at least KES 7.2 trillion, or 65% of GDP, but is projected to increase to 100% of GDP by 2030.

    “This case goes well beyond the SGR – it’s about the survival of participatory democracy in Kenya,” Khalifa said. “Are we going to remain a country where leaders spend our tax money like it’s their own? Or are we going to start demanding accountability?”

    Okoa Mombasa’s initial interest in the SGR documents stemmed from the project’s negative impact on the Coast region – and the lack of public participation on the issue of mitigating that impact. In an effort to increase revenues, the government in 2019 directedthat all containerized cargo at the Port of Mombasa be transported inland via the SGR. This forced logistics companies to move their operations to container depots in Nairobi and Naivasha, devastating Mombasa’s port-based economy.

    The moves resulted in thousands of job losses and significant revenue loss for the Mombasa County government, and essentially amounted to a mass transfer of wealth and economic activity out Mombasa County to elsewhere.

    A court declared the cargo directive illegal in 2020, but it is still in effect pending an appeal.

    Okoa Mombasa resorted to the court filing after a long battle to obtain the SGR documents through other means. The coalition first filed a series of Access to Information requests with various government offices in December 2019, but failed to receive any substantive replies. Coalition members also staged as series of protests against the economic effects of the SGR in 2019 and 2020.

    The official petitioners of record for the case are Khelef Khalifa of Muslims for Human Rights (on behalf of Okoa Momabsa) and Wanjiru Gikonyo, national coordinator for TISA.

    [pdf-embedder url=”https://cms.kenyainsights.com/wp-content/uploads/2021/06/Final-Petition-21-June-2021.pdf”]