First Phase of Standard Gauge Railway to cost Ksh 327 Billion

From the beginning this was no ordinary project. The Kenyan government was not deluding itself that a project of this magnitude could be implemented purely with its funding.

The Cabinet, therefore, approved the project as government-to-government financed project.

The first phase of the project is estimated to cost Ksh 327 billion. In the 2014/2015 budget, the SGR received 19.4 billion shillings, which has been increased to 118.1 billion shillings in the 2015/2016 budget.

China Exim Bank is financing the project after Kenya and China signed a financial agreement on May 11th, 2014.

The Exim Bank share of funding is 90%, while the GOK contribution is 10%.

The Government has already set up a Railway Development Levy (RDL) to raise funds for the project by instituting a 1.5 per cent levy on imports.

Railway Development Levy Fund

In the 2015/2016 budget highlights, the Railway Development Levy Fund has been allocated 25.7 billion shillings.

The first phase of the project will include development of a new rail different from the current meter gauge line between Mombasa and Nairobi and the attendant infrastructure.

It will also involve the acquisition and commissioning of rolling stock to ensure the creation of a complete railway transport ecosystem that is ready for operations on the day it is commissioned.

The SGR is expected to improve Kenya’s productivity and competitiveness in the domestic and international markets and will be built according to Chinese railway design standards.  The railway will cater for both freight and passengers.