The Government plans to privatise rail services to repay funds borrowed for the construction of the proposed Kenya, Uganda and Rwanda railway network. The projected is expected to be completed by 2018.
The railway network will cost Sh1.16 trillion. This is close to 40 per cent of the value of Kenya’s finished goods and services (GDP), according to a statement issued by ministers of the three east African States.
The 2,937km of standard gauge rail makes it easy to interchange or use a standard type of locomotive on the tracks. “This is business and the railway line can pay for itself. People can come with their locomotives and run them on the track,” said Transport Cabinet Secretary Michael Kamau.
“We might privatise the services and own the track.” Business people can buy and own locomotives, which transport goods from the port of Mombasa to Uganda and Rwanda.
The Government will charge the business people for running the locomotives on the rail tracks. It is the same model used on roads where different business people own trucks, which ferry goods from Mombasa to the rest of the region.
Mr Kamau added that Government can raise money because of a sharp rise in the volume of cargo transported by rail. “We can raise a lot of money if you consider the fact that by 2017, the volume of cargo will be 32 million tonnes and railway will account for 22 million and Rift Valley Railways (RVR) two million tonnes,” Mr Kamau said.
He cited strong economic growth and the need to transport the oil discovered in Kenya and Uganda as the key in increasing the volumes.
25-year concession
Currently, the 20 million tonnes of cargo is transported with 96 per cent of it on road. RVR has a 25-year concession of running the railway.
While the three countries will be responsible for jointly sourcing the funds, each country will have to bear the burden of repaying its portion of the borrowed amount.
Analysts from Standard Investment Bank estimate Kenya will foot Sh438 billion, the largest share, to construct its share of the railway line that runs from Mombasa-Malaba/Kisumu.
