Infrastructure

Kenya Seeks Sh720bn for Naivasha-Malaba SGR Project

The project stalled after China decided not to provide additional loans.

Updated on

May 20, 2024

Workers building the Nairobi-Naivasha standard gauge railway. PHOTO | FILE

Kenya is seeking more than Sh720 billion to extend the standard gauge railway (SGR) from Naivasha to Malaba, in a bid to unlock the railway’s full potential.

According to the Cabinet Secretary for Roads and Transport, Kipchumba Murkomen, Nairobi and Kampala will jointly engage with potential donors to secure funding for the project.

“Different nations have been conversing with different governments, but now we want to go to them jointly and see if we can put together these resources and use them to deliver the infrastructure,” Mr Murkomen said.

The government sees extending the railway to Malaba, at the Kenya-Uganda border, as a means to enhance Kenya’s competitiveness by reducing transportation costs along the northern corridor.

“The project is viable; now the question is how you make it affordable. Then you structure the arrangement with the participation of the private sector,” he added.

The Naivasha-Malaba SGR project stalled in September 2018 when China, the financier of the Mombasa-Naivasha segment, chose not to offer further loans.

Phase 1 of the SGR project – running from Mombasa to Nairobi – was completed in 2017 at Sh327 billion, while Phase 2A from Nairobi to Naivasha was completed in 2019 at Sh150 billion.

Just before the completion of the Nairobi-Naivasha line, Kenya initiated plans to extend the railway to Malaba. Dubbed Phase 2B of the SGR project, the railway was to pass through Narok-Bomet-Kisumu, then to Bumula and Malaba.

The projected cost for its construction was Sh437 billion.

Kenya’s plan was progressing well until September 2018 when the government approached China for a third round of funding for the Naivasha-Kisumu SGR.

The Asian nation declined to approve the loan.

This came as a shock since Kenya and China Communications Construction Company had reached an agreement a month earlier to construct the railway.

The finer details of the deal were supposed to be finalized during President Uhuru Kenyatta’s planned official visit to China, but that did not happen.

Instead, Chinese Premier Xi Jinping requested that approval be deferred until Kenya undertook a commercial viability study on the Mombasa-Kisumu railway.

Consequently, Kenya announced its decision not to abandon the Naivasha-Malaba SGR project and opted to rehabilitate the existing meter gauge railway to Kisumu.

However, in January 2022, Chinese Foreign Minister Wang Yi appeared upbeat about a renewed opportunity for talks on the SGR funding agreement with Kenya.

During a tour of China-funded projects in Mombasa, Wang pointed out that the SGR project had been made a priority for completion under a master plan for the Horn of Africa, aimed at expediting the construction of this region’s belts of economy.

The master plan includes extending the SGR from Naivasha to Uganda, Rwanda, South Sudan, and eventually to the Democratic Republic of Congo.