The standard gauge railway project is 90 per cent funded by the China Exim Bank, with Kenya financing the remaining 10 per cent.
The railway is designed with an axleload of 25 tonnes and is expected to move up to 22 million tonnes of cargo per year at a speed of 80-100km/hr for freight trains. Passenger trains are, on the other hand, expected to achieve speeds of up to 120km/hr.
The facility is expected to offer the following economic and social benefits:
1.) By providing a fast, efficient and reliable mode of transportation, the SGR cargo trains will help decongest the port of Mombasa by ensuring goods that arrive at the port are moved to the hinterlands without delays.
2.) Besides efficiency, the standard gauge railway will reduce the cost of transporting cargo from Mombasa to the hinterlands. According to the Kenya Railways Corporation, it will cost about Sh50,000 to transport a container through the SGR cargo trains compared to Sh90,000 by road from Mombasa to Nairobi.
3.) The government expects the new railway to boost Kenya’s GDP growth of at least 1.5 per cent during its operation – allowing the Chinese loans to be “paid back in about years,” according to Transport secretary James Macharia.
4.) The facility will enable passengers to enjoy a faster and cheaper journey compared to eight-hour bus trips between Nairobi and Mombasa. This will help reduce wear and tear on highways; thereby reducing roads maintenance cost.
5.) The railway will drastically reduce the number of heavy trucks on the road. This is expected to reduce the number of accidents; hence making the roads safer for human traffic.
6.) The standard gauge railway will speed up industrialisation through cheaper transport and the establishment of new industries to service the new railway.
7.) The new railway will protect the environment through reduced carbon emission.
But despite its many benefits, there are fears in some quarters that the new railway is too expensive to make any economic sense. According to a 2009 study by Canadian Pacific Consulting Services, the benefits of the SGR will be marginal. The study said that the project is “cost prohibitive” using “even the most optimistic” traffic and income projections.
Since most of the new railway’s revenue is expected to come from cargo transportation, Kenya Railways will have to come up with incentives to make businessmen move their goods via the facility considering that 95 per cent of all the cargo is currently being moved by road.
It is likely that a new law will be passed requiring certain cargo to be moved by rail to ensure significant transfer of freight away from the Mombasa-Nairobi highway.
A 2013 World Bank study found that investment in a standard gauge railway would make economic sense only if it could attract an additional rail freight in the order of between 20 million and 55 million tonnes per year.
In 2015 the port of Mombasa handled 26 million tonnes of cargo – meaning the standard gauge railway would need to win all the freight currently moved by road from Mombasa.
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