President Uhuru Kenyatta on Tuesday launched freight service on the standard gauge railway (SGR) from Nairobi to Naivasha.
The new service now extends SGR freight services from Mombasa to the Naivasha Inland Container Depot (ICD), taking transit cargo deeper into the country's hinterland.
Importers will pay Sh60,960 for hauling a 20-foot container to the Rift Valley town from the Port of Mombasa.
President Kenyatta launched the service, having rolled out the passenger service on the Chinese-built railway line in mid-October.
The delay in the construction of a dry port in Naivasha was behind the exclusion of the cargo business, which is critical in making the multi-billion shilling line viable.
At Sh60,860, the rail operators and Kenya Railways have added less than Sh10,000 on the Sh51,275 it costs to ferry a 20-foot container from Mombasa to Nairobi.
Cargo in the 40-foot container to Naivasha from Mombasa will cost $850 for goods less than 21 tonnes and $910 for those between 21 and 30 tonnes.
The SGR cargo fees have faced opposition from importers who say it is costly to ferry goods on the line compared to doing so by road due to more time spent clearing goods at the Nairobi train depot and the need to send a truck to collect the goods from there.
“The ICD (Inland Container Depot) will essentially serve cargo going west of Nairobi, and our regional partners are upbeat. It perfectly fits in the infrastructure plan of the government,” Transport Principal Secretary Esther Koimett told the Business Daily.
The Sh6.9 billion Suswa ICD, a few kilometres from SGR’s Maai-Mahiu terminus, is intended to serve freight cargo destined for Uganda, Rwanda, South Sudan and the Democratic Republic of Congo via the Mombasa port.
Kenya had planned to open an industrial park in Naivasha, offering companies tax breaks for investing in manufacturing. It had also offered preferential tariffs for electricity generated in the nearby geothermal fields. But that has been delayed.
From the ICD, the cargo will be ferried to Western Kenya and the neighbouring countries by road, but the State has plans to revamp the old metre gauge railway (MGR) line and link it to the SGR track in Naivasha. The government had earlier announced plans to revamp the Malaba line with Sh21 billion funding from an unidentified private backer rather than building another modern one with Chinese money.
Sources familiar with the plan reckon that the quotation for the project from a Chinese contractor had surpassed the State’s budget by more than three times, sending the government back to the drawing board.
The government Monday remained upbeat about connecting the SGR to the old MGR line.
“We shall also be introducing direct cargo trains from Mombasa to Naivasha, taking only eight hours. From Naivasha, they will be transported by road to the MGR station for onward transmission to the neighbouring countries,” said Transport Cabinet Secretary James Macharia.
Kenya Railways has recommended a cut on SGR cargo fees due to protests from importers on the current costs. The rail agency — which acts as the regulator of railway transport — says in confidential internal performance reports seen by the Business Daily that there are plans to lower the cost of ferrying goods on SGR.
The SGR cargo sector has struggled for business in the face of competition from truckers, prompting a government campaign to drive cargo to the new transporter and free up highways from the large number of trucks.
The China Communications Construction Company runs the SGR cargo and passenger business at a fee.