President Ruto to spend Sh100bn on new trains, SGR revamp

President William Ruto’s administration boosted spending on the Nairobi-Mombasa Gauge Railway (SGR) with a plan to reach Sh100 billion in the next three years to refurbish the line, build new sidings and purchase more locomotives and freight cars.

A report from the National Treasury shows that the Ministry of Transport, headed by Kipchumba Morkomin as Cabinet Secretary, will receive an additional NIS 97.7 billion for “development of standard railways” between July this year and June 2026.

This reverses the trend in which the previous government had cut allocations to the Singapore dollar and will push spending related to this line beyond Sh780 billion by June 2026.

Starting in July, the government has allocated Sh37.4 billion from the Railway Development Levy Fund (RDLF) to the Nairobi-Mombasa SGR.

The bulk of the allocation, according to the co-division with The daily business of haulage, to acquire additional locomotives and freight cars at a cost of Sh11.9 billion.

Kenya last bought 1,620 locomotives and trolleys from China in 2018.

Transfer allocations show that the government has no plans to extend the SGR beyond Naivasha to Kisumu and finally Malaba in the next three years.

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The remainder of the money, earmarked under the “Mombasa to Nairobi SGR” vote will largely be used to build new feeder lines and rehabilitate old rail lines (MGR).

The Railway Development Fund (RDF) is charged at the rate of two percent, on all goods imported into the country for domestic use.

“The purpose of the tax shall be to provide funds for the construction of a standard railway network in order to facilitate the transportation of goods,” reads part of the Miscellaneous Fees and Levies Act which sets out the fund.

Budget appropriations for the acquisition of locomotives and wagons are expected to increase to Sh16 billion in fiscal year 2024/25 and Sh22.2 billion in fiscal year 2025/26, making the total appropriation for the three years to Sh50.1 billion.

Another MYS 5.9 billion will be spent on rehabilitating, remanufacturing or repairing locomotives, wagons and buses, according to a breakdown of the MYS 37.4 billion provisions.

The new feeder lines will connect some sections of the modern railways such as the Mombasa SGR Terminus to important urban centres.

This includes Sh4.48 billion for the construction of the Riruta-Lenana-Ngong railway and Sh2.96 billion for the construction of a metro rail link between Embakasi station and the city of Ruai.

In the next 12 months, the government will also build a new 2.8 kilometer railway (MGR) line from Mombasa SGR station to Mombasa MGR station at a cost of Sh2.5 billion.

This money will also be used to build a railway bridge across the Macoba Bridge that connects Mombasa Island to mainland Kenya.

A new meter gauge railway linking the inland container depot at Naivasha to the existing Longonot railway station has been earmarked for Sh1.6 billion in the next fiscal calendar.

Sh400 million has been earmarked for the construction of a metro rail link between Athi River Station and East African Portland Cement Company.

This is expected to rise to Sh1.17 billion in the financial year starting in July next year and Sh1.36 billion in the 2025/26 financial year.

Another metro rail connecting Athi River Station, NSSF Station and Mavoko will have a capacity of Sh450 million, a figure set to rise to Sh1.56 billion and Sh1.89 billion in 2024/25 and 2025/26.

The funds will also be used to rehabilitate the line separating Longonot from the western border city of Malaba, which aims to facilitate the movement of goods from the port city of Mombasa to Uganda.

Also in this border city, which is prone to congestion, the state is planning to build the Malapa Cargo Yard. About 474 million shillings has been set aside for this project.

Other spending items will include plant and equipment acquisitions, which will take Sh3.8 billion in the next financial year, Sh1.1 billion in the 2024/25 financial year and Sh600 million in the 2025/26 financial year.

A logistics center is to be constructed for the Athi River, with the state setting aside Sh1.125 billion.

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The provision for this planned logistics center will be reduced to Sh375 million in the year ending June 2025.

Initial plans were to extend the SGR to Uganda, however, this has since stalled with the treasury not having the funds to extend to Kisumu and finally to Malaba.

Mr Morkomin said at the beginning of this year that the Kenya Kwanza Administration in partnership with the Chinese government was keen to extend the SGR from Mai Maheu in Naivasha to the Uganda border through a five-year plan that would see the operation of a multi-billion dollar railway through Narok, Bomet, Nyamira, Kisumu and Malaba.

“In the long term, we would like to complete the SGR connection from Sosua to Kisumu via Bumit, Nyamira, parts of Kisii and onwards to Malaba.”

Later, we can consider upgrading the existing MGR via Nakuru to Kisumu and through Eldoret to Malaba,” he said on December 15.

With the additional expenditures, the government hopes the country’s most expensive piece of infrastructure will help grow the economy and improve the standard of living for Kenyans.

Former President Uhuru Kenyatta’s administration borrowed Sh656.1 billion ($5.1 billion) in three tranches to build the two phases of the SGR, contributing to a large buildup of Kenya’s stock of debt.

Kenya will use Sh11.9 billion to acquire rail cars that will be used to transport goods on the SGR from Mombasa to Naivasha.

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