SGR risks being shut down by Chinese firm over Ksh38 billion debt

SGR. [Photo courtesy]

President Uhuru Kenyatta’s flagship project, the Standard Gauge Railway risks being halted over Ksh38 billion debt in outstanding bills to Chinese firm, Afri Star.

This means that the passenger train, Madaraka Express and cargo trains will be grounded.

According to National Assembly’s Budget and Appropriations Committee (BAC), the government through the Kenya Railways has not paid Sh38 billion in utility bills to Chinese-owned company Afri Star Railway Operation Company Ltd which runs the railway.

Afri Star is a subsidiary of the state-owned China Road and Bridge Corporation (CRBC).

Chairman Budget Committee Kimani Ichun’gwah in his 2020/21 report said that Kenya has no much of a choice other than paying the dues owed to the Chinese firm managing the railway’s ticketing system, landing and offloading of cargo.

Afri Star also oversees the collection of fare from passengers from online platforms such as M-Pesa.

“Pending bills arising from operations of the standard gauge railway have accumulated to Sh38 billion and this may force the operator to pull out of the daily operations of the project,” he said in the report.

In a rejoinder, Kenya Railways in a statement said that it has no knowledge of the report and have not received any grievances from Afri Star.

“As Kenya Railways, we have not received any communication from Africa Star. We have also not received the report from Parliament and at the moment we cannot comment,” Kenya Railways maintained.

The shortfall in revenue collection on the SGR continues to haunt the State which has borrowed heavily to invest in the SGR line running from Mombasa to Nairobi and then to Suswa in Naivasha.

With the coronavirus pandemic, revenue collection for SGR fell by eight percent between January and April.

In 2020, the passenger and cargo trains generated Ksh3.92 billion compared to Ksh4.27 billion generated in a similar period in 2019, data from the Kenya National Bureau of Statistics shows.