Kenya to acquire 300 SGR wagons by end of February

The newly acquired 50 Standard Gauge Railway (SGR) Freight Service Wagons at Port Reitz Freight Station in Mombasa, Kenya in this photo taken on February 5, 2024. PHOTO | KEVIN ODIT | NMG

Kenya has received fifty new standard gauge railway (SGR) wagons that are aimed at

boosting the transport of cargo on the Chinese-built line.

The wagons, procured for the Madaraka Express SGR freight service, were received on Monday by the Transport Cabinet Secretary Kipchumba Murkomen.

A second batch of 250 wagons is expected to dock at the port of Mombasa later this month having been loaded at the Tianjin port in China towards the end of last month, said Mr Murkomen.

“Railway transport is a key enabler of the aspirations set out in our country’s long-term development blueprint, Vision 2030,” Mr Murkomen said.

Read: Grand $15bn plan to expand Kenya SGR to Kisumu, Malaba

“My ministry, therefore, will ensure we have the requisite human capital, operational assets and information systems that are geared towards achieving this goal,” he added.

This is the first-time new wagons have been added since the launch of SGR in May 2017.

At the time, Kenya received 60 wagons that were deployed on the modern railway, which runs from Mombasa through Nairobi to Suswa.

Mr Murkomen said 20 of the expected wagons will also have power plugins to enable the movement of refrigerated containers, a hitherto untapped business potential for SGR.

$13 million plan

The refrigerated wagons, said Mr Murkomen, would be a big boost to Kenya’s horticultural sector, enabling rail services to respond to the preferences of customers from around the world.

To this end, Kenya has also concluded a cold-chain logistics agreement with its partners in the Netherlands.

Read: Kenya to spend $731m on new trains, SGR revamp

Kenya is also expecting 20 more SGR passenger coaches, he said. Of these, six will accommodate people with disabilities.

Kenya has set sights on a Ksh2.1 trillion ($13.13 million) plan to extend the SGR to Kisumu, Malaba and Isiolo by the end of June 2027.

The initial plan was for the SGR to extend to the lakeside city of Kisumu before connecting to Malaba town, which borders Uganda.

Currently, the SGR ends abruptly in Naivasha, thus hampering the movement of cargo from the region on the modern railway line.

SGR loans

Meanwhile, debt repayment for the SGR continues to eat into the country’s dwindling foreign exchange (forex reserves).

Kenya’s January payments towards the SGR loans from China have appreciated by Ksh14 billion ($87.5 million) on account of a weaker shilling that has inflated external debt and its service costs.

World Bank data on Kenya’s external debt payments shows that the country will spend $536.9 million (Ksh84.8 billion) to service the loans, which are paid on a semi-annual basis in January and July.

Read: Kenya spends record $471m on China debt in first quarter

The payments comprise a principal amount of $289.95 million and interest of $246.96 million.

Increased financing costs for the SGR might have offset the 21.2 percent increase in revenue in the financial year to June 2023.

Data from the Kenya Railways Corporation shows SGR made a record Ksh18.2 billion ($113.8 million) in revenues during the period, marking a significant increase from Ksh15.01 billion ($93.8 million) it earned in the previous year.