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Tuesday, August 4, 2020

SGR faces collapse over Sh. 38 billion operation debt

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Africa Star: The SGR passenger and cargo services may soon shut down if an unpaid debt of Sh. 38 billion in bills is not paid. This red flag has been raised by the National Assembly’s Budget and Appropriations Committee (BAC). 

According to this committee, says a report that was published by the Business Daily, the Kenya Railways has not paid Sh. 38 billion to Africa Star Railway Operation Company Ltd, the Chinese company contracted to operate the trains.

“Africa Star Railway Operation Company is majority-owned by China Road and Bridge Corporation (CRBC) and was contracted in May 2017 to run the passenger and cargo trains on the SGR,” said the report. “Africa Star manages the ticketing system, landing and offloading of cargo and collection of passenger fares, including non-cash revenues like M-Pesa.”

Revealed: Why China said no to Uhuru’s Naivasha-Kisumu SGR quest

The report, however, said that Kenya Railways has not received any protest letter from Africa Star over the unpaid bills. “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,” Kenya Railways was quoted as saying.

According to the report, the Chinese company has the sole right to manage the SGR ticketing system and any associated software and hardware .

“Africa Star can only foot repair bills of less than Sh. 100,000 under the contract that requires Kenya Railways to pay the maintenance fees. Further, the operator cannot be held responsible for any legal claims from third parties involving damage to property, death, illness or personal injury. The Sh. 38 billion in pending bills add to the Sh. 420 billion that Kenya borrowed to build the modern line from Mombasa to Nairobi and purchase of engines and coaches,” said the report.

The SGR has been one of the most controversial mega projects to be undertaken by a Kenyan government in the recent past. Critics fear that the project, which stalled after the completion of the Nairobi-Naivasha phase, has no value for money.

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