Kenya seeks Sh720 billion to connect SGR from Naivasha to Malaba

Kenya is seeking more than Sh720 billion to construct the Standard Gauge Railway (SGR) from Naivasha to Malaba to reduce the cost of transporting cargo once the project is complete.

Transport Cabinet Secretary Kipchumba Murkomen said three other countries have joined the cluster to increase bargaining power to donors who had been evaluating the viability for many years.

Murkomen said Kenya is committed to lowering the cost of transport along the Northern Corridor by investing in infrastructure, and the railway is one of the means within the Kenya Kwanza blueprint.

“The government has already estimated the cost of constructing the line from Naivasha to Malaba at $5.3 billion (Sh720 billion) which we hope to raise through Public Private Partnership or loans,” said Murkomen.

The CS said plans are underway to connect Mombasa and Kinshasa through SGR to ease the cargo hauling process.

“Kenya and Uganda have completed the harmonisation of the technical specifications and standards for the SGR and Rwanda are exploring possibilities to join the existing working framework between Uganda and Yapi Merkezi, the contractor on the update of feasibility study of Mirama Hills-Kigali section which will make the project more viable,” said Murkomen.

On Friday, four East African Community Member States joined Kenya and Uganda in developing modern railways as lack of funding remained the main challenge in the construction of SGR from Naivasha onwards.

Rwanda, Burundi, the Democratic Republic of Congo and South Sudan joined the SGR cluster joint ministerial committee, where they committed to engaging different development partners in constructing a modern railway to ease the movement of goods along the Northern Corridor.

During the cluster meeting in Mombasa, the regional ministers in charge of infrastructures acknowledged fundraising challenges for the past five years in funding rail projects.

During the meeting, Dr Jimmy Gasore - Minister of Infrastructure, represented Rwanda and DRC Minister of Transport Roger Te Biasu, where the countries were added to the SGR cluster.

To ensure the SGR connection between Mombasa and Kinshasa, the ministers affirmed their commitment to ratify the existing SGR Protocol and the SGR Tripartite Agreement by the DRC.

This is the second time Kenya and Uganda have tried to mobilise funds to construct the project after the agreement signed last year in July.

Kenya and Uganda revived the stalled project to build the SGR railway between them but failed to convince financiers of the viability.

In the agreement between the two countries, the two governments agreed on the search for the money, which could include loans or an arrangement for public-private partnerships to extend the railway from Naivasha to Kampala before extending it to Rwanda and South Sudan.

The two governments hoped to finalise joint resource mobilisation before December 2023 to fund the line from Naivasha to Malaba to Kampala and from Kampala to Kasese-Mpondwe with a branch line from Bihanga to Mirama Hills to ferry goods from Mombasa to Uganda border with Rwanda and South Sudan by SGR.

The two governments had placed their offers to different financiers from Europe and the Middle East who had shown interest in investing in the project.

The project was envisaged about 10 years ago when funding had been conditioned on a joint bid, which both countries couldn’t mount.

In January last year, Uganda signed a memorandum of understanding (MoU) with Turkish firm Yapi Merkezi to pave the way for the construction of SGR from Malaba to Kampala.

Uganda Minister of Works and Transport Fred Byamukama said the country is in the final stages of the negotiations with the proposed contractor- Yapi Merkezi - expected to sign the contract at the end of this month.

“It was a challenge to do the project piecemeal, we cannot have SGR in Malaba to Kampala if Naivasha-Malaba is not complete that is why we are seeing funds to ensure each sections are done simultaneously,” said Mr Byamukama, adding that partner States are pursuing resource mobilisation as a project.

In 2019, then Kenyan President Uhuru Kenyatta, on his fourth trip to China, failed to secure $3.68 billion to fund the third phase of his signature SGR project to extend to Kisumu, then on to Malaba.

Instead, Kenya bagged some $400 million to upgrade its 120-year-old metre-gauge-railway to Malaba on the border with Uganda. Beijing’s assessment indicated at the time that without Uganda, whose participation is vital to connecting South Sudan and Rwanda to the Indian Ocean port of Mombasa, the SGR’s viability wouldn't be feasible.