Taxman makes U-turn on SGR cargo order

The taxman and Kenya Ports Authority (KPA) have made a U-turn over a directive that forces importers to use the standard gauge railway (SGR) for goods coming to Nairobi and beyond from the Mombasa port.

The two agencies on Tuesday evening said they had postponed the plan directing importers to move their containers from Mombasa to Nairobi Inland Container Deport (ICD) through the SGR from August 7.

The move looked set to boost SGR cargo revenues but hurt road truckers and operators of container freight stations in Mombasa that operate like clearance ports.

The SGR line has struggled to attract adequate cargo volumes, with investors balking at the tariffs to transport goods from the Mombasa port to the ICD in Nairobi.

The order triggered opposition from MPs with the lawmakers summoning Transport Secretary James Macharia over the cargo directive.

“This is an illegal directive purportedly signed by both KPA and KRA to compel all importers of cargo to use the SGR.

“They gave a reason that it is for the purposes of efficiency but we have raised the matter in Parliament and the mood of the House is that this is very wrong,” Mvita MP Abdulswamad Nassir said on Tuesday.

Freight services, which started in January 2018, generated Sh4 billion in the year to December while passenger ticket sales were Sh1.61 billion, putting SGR revenue at Sh5.6 billion.

The revenue was not enough to meet the operational costs, which were earlier estimated at Sh1 billion a month or Sh12 billion a year.

This prompted an increase in freight charges this year and passenger fares for children on Mombasa-Nairobi trains by 100 per cent.

Kenya Transporters Association reckons that it cost about Sh80,000 to truck a container from the port to a business on the outskirts of Nairobi using road.

The container will costs nearly Sh100,000 on SGR including the Sh30,000 fees of getting the cargo from the ICD in Embakasi to the owner’s premise.