Fresh SGR cargo tariff cut raises viability concerns - Daily Nation

Fresh SGR cargo tariff cut raises viability concerns

Monday July 9 2018

Atanas Maina

KRC managing director Atanas Maina. FILE PHOTO | NMG 

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The Kenya Railways Corporation (KRC) has expanded its subsidised freight tariff to cover bulk cargo, raising more questions as to whether the fast trains can operate without taxpayer largesse.

Under the “promotional tariff” which takes effect immediately, owners of bulk cargo will pay a flat fee of Sh3.5 per tonne for every kilometre covered, from Mombasa to Nairobi freight terminus.

Bulk cargo refers to commodity that is transported in unpackaged forms such as petroleum, grain or coal. The move is seen as another step by KRC to woo shippers to the Standard Gauge Railway (SGR) trains.

“We have introduced a promotional tariff on bulk cargo transportation on the Madaraka Express freight service. It will run up to December 31,” said KRC managing director Atanas Maina on Monday.

“The cargo will be offloaded at Nairobi’s freight terminus and not at the Embakasi-based Inland Container Depot (ICD). This is because it will be coming to Nairobi from the port of Mombasa once cleared.”

The KRC has been running a promotional tariff for other categories of goods since it rolled out the freight service at the start of this year.

In May it extended the promotional freight charges – which were to end on June 30 by five months meaning they’ll be in force throughout this year.

Last month, the Transport committee of the National Assembly revealed that the Treasury had reviewed its budget to accommodate an additional Sh59 billion payment linked to the fast trains operations.

Without giving breakdown, the committee said the taxpayer money covered payment for pending certificates and management fees for the operations of the SGR, which is run by the China Communications Construction Company.

The train subsidy programme also cover passenger service where ticket sales netted only Sh590.2 million in six months to December, falling lower than the operation costs.

The KRC introduced a market price of Sh64, 500 for a 20-foot container and Sh84, 300 for a 40-foot container in January and cut the fares following reduced traffic.