CS Macharia defends loss making SGR on sentimental value


CS Macharia defends loss making SGR on sentimental value
Transport Cabinet Secretary James Macharia engages Principal Secretary Esther Koimett and Acting KRC MD Phillip Mainga during the second anniversary of the Madaraka Express Passenger service at the SGR Nairobi Terminus on Friday May 31st, 2019 PHOTO | CITIZEN DIGITAL

In Summary

  • The revision of freight revenues by the (KNBS) from the provisional estimates by the Kenya Railway Corporation (KRC) further puts a spanner in the works of reaping returns from the heavily capitalized infrastructure project.
  • While the KRC put the service’s revenues for 2018 at Ksh.10.2 billion, the revision which largely saw the recalibration of uplifted cargo to 2.9 million tons to significantly bring down revenue earned to Ksh.5.7billion.
  • Tasked on the discrepancy, CS Macharia downplayed the focus on returns from the project saying the impact of the investment transcends beyond just the profit and loss account.
  • Questions on the viability of the project as expected to take precedence as public debt concerns linger this is as Kenya begins making repayments on the Ksh.324 billion loan from the China EXIM Bank in January 2020.

Transport Cabinet Secretary  James Macharia has defended the loss making nature of the Standard Gauge Railway (SGR) project insisting on the initiative’s impact in alternative segments of the economy.

According to him, Kenyans should derive benefit from the project’s sentimental value in an attribute that gets backing from the management if the Kenya Railways Corporation (KRC)

“Recently I travelled with my CS and wherever we went, he was referred to as the father of the SGR this as a majority of Kenyans associate themselves with the railway service. The SGR is bound to spur the economic growth of this country, I would believe we’re getting there,” Kenya Railways acting MD Phillip Mainga said.

Mr. Mainga whose speech preceded that of Transport Cabinet Secretary James Macharia during the second commemoration of the publicized passenger service- the Madaraka Express on Friday further said the uplift of both passengers and freight is stabalizing bringing to the horizon the project’s vision of a 1.5 percent contribution to GDP.

According to the Transport Ministry, the passenger service has in 24-months to the end of May uplifted nearly four million travellers on the nearly 470 kilometres line.

Freight services which makes for the SGR lifeline have meanwhile hit 4.4 million tonnes since activation in January 2018 but remains on the halfway line to hitting the set cargo limit estimated at 8.8 million tons per year.

The revision of freight revenues by the Kenya National Bureau of Statistics (KNBS) from the provisional estimates by the KRC further puts a spanner in the works of reaping returns from the heavily capitalized infrastructure project.

While the KRC put the service’s revenues for 2018 at Ksh.10.2 billion, the revision which largely saw the recalibration of uplifted cargo to 2.9 million tons to significantly bring down revenue earned to Ksh.5.7 billion.

Tasked on the discrepancy, CS Macharia downplayed the focus on returns from the project saying the impact of the investment transcends beyond just the profit and loss account.

“The balance sheet does not give you the real picture. Don’t look and the profit and loss assessment, this account is meaningless. It does not make sense to say the SGR is loss making as the important bit is whether the line is servicing Kenyans,” CS Macharia told a news conference.

Instead, CS Macharia shifted his focus to the lines effects to touch for instance on the improved tourism receipts as hotel bookings hit an average 90 percent occupancy attributed to the created ease of access to the port city of Mombasa.

Further Macharia, pointed to the various feauters of the multi-billion shillings project across the globe which also includes the capture of accolodes such as the 2018 award of merit from the Global Best Projects Awards.

While the SGR project has clearly brought a sense of pride to both the State and Kenyans, questions on the viability of the project as expected to take precedence as public debt concerns linger.

This is as Kenya begins making repayments on the Ksh.324 billion loan from the China Export and Import Bank (EXIM) in January 2020.

The SGR service comes up for appraisal once more at the end of June 2019 having in its first year of operation slumped to a Ksh.9.9 billion loss on an account of depressed cargo uplifting and bloated operational costs.

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