A Chinese firm that has been running the Standard Gauge Railway (SGR) has surrendered more functions to Kenya Railways Corporation (KRC) ahead of the full handover scheduled for May 2022.
Initially, Kenya Railways was only tasked with handling ticketing, security, and fuelling functions that were handed to it in March 2021. This was done in accordance with the contract entered between the two parties.
However, the Chinese firm, Africa Star Railway Operation Company (AfriStar), which has been at the centre of controversies over ownership, has surrendered the loading and offloading of the SGR passenger and cargo trains to Kenya Railways as part of a deal to fully offload the running of the multi-billion Chinese-funded project to Kenya.
“The corporation (Kenya Railway) has now assumed the loading and offloading functions from Africa Star Railway Operation Company, and in terms of percentages, we can say that we are now at 60 per cent,” KRC Managing Director, Philip Mainga, stated.
"The management and the board is determined to see a gradual takeover of operations from AfriStar. We are optimistic that once all staff members from the operator are brought on board, the cost of operation will go down."
KRC entered a deal with AfriStar, a subsidiary of China Road and Bridge Corporation (CRBC), in 2017 to help Kenya manage the multi-billion project.
According to the contract, AfriStar has the right to manage the ticketing system and software and hardware functions of the SGR. However, in 2020, President Uhuru Kenyatta-led government entered another deal to take over some of the functions by May 2022. This decision was informed by reports that the payments to the operator were unsustainable.
According to the Ministry of Transport, the country spends an average of Ksh1 billion per month on the Nairobi - Mombasa railway line.
With the recent inflation adjustments and surge in oil prices, lubricants, loading, and unloading, maintenance, and management, this cost is projected to hit Ksh1.8 billion per month.
In its three years of operation, SGR posted a combined operating loss of Ksh21.68 billion, exposing taxpayers to a huge bill to sustain its operations.
Apart from the operation costs, Kenya is also obligated to repay a loan of Ksh324 billion it acquired from the Exim Bank of China in May 2014 to fund the project.
However, in the latest restructuring and handover process, KRC intends to keep a few Chinese nationals to help with other operations.
"We will need only a few technical expatriates once we resume full operation of the SGR in May," Maingi remarked.
