The Standard Gauge Railway which is President Uhuru Kenyatta’s flagship project risks halting its services over Ksh38 billion debt the state owes a Chinese firm.
According to a report by Business Daily, The National Assembly’s Budget and Appropriations Committee chaired by Kikuyu MP Kimani Ichung’wah disclosed that Kenya Railways had delayed in settling the pending bills to Africa Star Railway Operation which runs the day-to-day SGR operations.
The committee further indicated that as long as the debt remains unpaid, the Chinese company contracted in May 2017, risks pulling out of its contract hence grounding services.
“Pending bills rising from operations of the Standard Gauge Railway have accumulated to Ksh38 billion and this may force the operator to pull out of the daily operations of the project,” outlined the committee.
The company is tasked with ticketing, landing and offloading cargo as well as managing passenger fares.
The Ksh38 billion is part of Ksh420 billion that the state borrowed from China to aid in construction of the loss-making railway line.
According to statistics from the Kenya Bureau of Statistics, the passenger train arm of SGR generated Ksh3.9 billion in the first quarter of 2020, a drop from Ksh4.2 billion it made in a similar period in 2019.
Kenya Railways, in a statement, disclosed that it had not received a protest letter from the Chinese firm neither was a formal communication addressed to it from the Budget Committee.
“As Kenya Railways, we have not received any communication from Africa Star. We have also not received the report from Parliament and at the moment we cannot comment,” the corporation told Business Daily.
This comes barely a week after the state parted ways with a Chinese contractor after claiming that the company quoted in excess of Ksh50 billion for the upgrade of the Naivasha-Malaba Metre Gauge Railway (MGR).
The government shelved the plan to extend the Standard Gauge Railway (SGR) to Western Kenya over financial reasons and opted to upgrade the MGR which will be connected to SGR in Naivasha.
Profit-wise, SGR made Ksh10 billion losses in 2017 while in the financial year ending June 30, 2019, it registered Ksh6.8 billion losses, costing taxpayers Ksh 18.6 million daily.
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