Kenya’s new railway cuts losses, but still a long way from breaking even

The standard gauge railway (SGR) between Nairobi and Mombasa has recorded a reduced loss for its second year of operation, according to figures compiled by the Kenya National Bureau of Statistics (KNBS) and reported in Business Day.

The line made a revenue of $126m for 2019, compared with $57m reported in 2018.

That is less than the operating cost, currently estimated to be $170m, compared with $120m the year before.

The increase was driven by an increase in freight income. KNBS said this was partly explained by use of normal tariffs in 2019 compared with promotional tariffs in 2018.

Cargo carried on the SGR accounted for more than 70% of national revenue from freight.

Income from passenger ticket sales increased to $53m compared with $19m in 2018, again reflecting a rise in price and more first-class tickets sold.

Income from the rail line is required to meet the loan repayments to China, which began in May last year after a five-year grace period. The government borrowed $3.2bn to build the line.

However, Kenya is planning to take on more debt to speed economic growth. Last year, the government lifted its cap on public debt in order to restart work on some $3.8bn of stalled infrastructure projects.

At present the county’s debt to GDP ratio stands at about 60%, but this can increase to 100% under new rules.

Kenya’s economy grew by 5.4% last year, a slight slowdown from the 6.3% reported in 2018.

Image: The newly built eastern terminus in Mombasa (SGR)

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