Kenya Railways will increase cargo charges on the standard gauge railway between Mombasa and Nairobi from January 1, in a move aimed at raising more revenue for the line and easing the cost of paying the Chinese operator.
The new tariff book will end the promotional rates that had been in place since cargo operations began. Under the revised charges, a 20-foot container from Mombasa to Nairobi will cost $500, or Sh51,275, up from Sh35,000. A 40-foot container will rise to Sh71,785, from Sh40,000, a jump of 79.9 per cent.
Kenya Railways said the lower rates were temporary and would expire on December 31, 2018. The agency said the new charges would take effect the following day.
For cargo moving in the opposite direction, a 20-foot container from Nairobi to Mombasa will cost $250, or Sh25,637, compared with Sh25,000. A 40-foot container weighing up to 20 tonnes will be charged at $350, or Sh35,892, while one weighing between 21 and 30 tonnes will cost $375, or Sh38,456. Kenya Railways had been charging Sh30,000 for a 40-foot container on that route regardless of weight.
The tariff review comes as the SGR cargo business continues to face pressure from road transporters, who have offered lower or more flexible delivery options. Cargo from Mombasa has been ending at the inland container depot in Embakasi, Nairobi, forcing importers to pay an extra Sh15,000 to Sh20,000 to move goods to industries in and around the city.
Truckers have been charging between Sh60,000 and Sh80,000 to deliver a 20-foot container from Mombasa port directly to an importer’s premises in Nairobi, making road haulage a strong competitor to the railway.
The Treasury also wants the railway to generate more income to help service loans used to build the multi-billion shilling project. Kenya paid Sh26.61 billion to China Exim Bank in the year ended June, and the Treasury expects to pay Sh36.24 billion in the year starting July.
Kenya borrowed Sh324 billion from China Exim Bank in May 2014 to finance the line. The loan is repayable over 15 years, with a five-year grace period.
China Communications Construction Company runs the SGR cargo and passenger business under an undisclosed management fee.
The promotional freight tariffs were introduced in January when cargo operations began. They were first expected to end in April, then extended to June and later to December.
