As the second phase of the Standard Gauge Railway (SGR) opens, questions abound on its viability even as uncertainty remains over the funding to complete last phase to Ugandan border in order to make it commercially viable.
The launch today will only be for passengers with cargo expected to be introduced later.
The Chinese funding for the last phase of the SGR to Malaba had been pegged on the willingness by Uganda to build its part from the Kenyan border to Kampala. However, Uganda seems to have hit a snag in terms of funding after China turned down their proposal, forcing the landlocked neighbour to start rehabilitating its metre gauge railway.
Cargo brings the bulk of revenue for the Kenya Railway and with incomplete phase, it makes it difficult for the government to recoup money to pay Sh150 billion loan spent on this section alone as the volumes of goods will be inadequate.
“The government has apparently put money on something that do not have viability at the moment. The essence of the second phase of SGR was to serve businesses at the proposed industrial park in Naivasha, but at the moment we do not know how far the plans have moved,” economist Toni Watima told Digital