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Sh1.3trn extra needed to extend standard gauge railway to Kigali

By LILIAN OCHIENG
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An additional Sh1.3 trillion will be needed to complete construction of the standard gauge railway linking Mombasa and Kigali.

And given the urgency to have the project done, a communique released by heads of state after the 10th Northern Corridor integration projects summit in Kampala last week directed partner states to urgently finalise proposals for the remainder of the sections and submit them to China Exim Bank before July for funding evaluation.

Only Mombasa-Nairobi route is fully funded. In August last year, China pledged Sh425 billion to Kenya for Phase 1 of the project. A total of Sh319 billion was put aside for constructing the Mombasa to Nairobi rail. The money will also buy locomotives and wagons.

“We are doing studies for Phase 2 of SGR that runs from Nairobi to Malaba, we will finalise and present it before partner states by July,” National Treasury Cabinet Secretary Henry Rotich told the Nation, noting that the studies will provide a better picture of the financing need.

The summit was attended by Presidents Uhuru Kenyatta, Paul Kagame and host Yoweri Museveni.

COORDINATE PROJECTS

The urgency to complete the project also saw the meeting set up the Northern Corridor Implementation Authority to be staffed with full time employees to coordinate infrastructure projects identified under the initiative. The Ministry of Transport and Infrastructure is working alongside Kenya Railways Corporation (KRC) to complete the design.

KRC Managing Director Atanas Maina said in a statement that after the study is complete, the National Treasury would be approached to find a lender to finance the project, “the lender could be China Exim Bank or any other financier.”

The Presidents of the three countries had earlier in March directed their respective ministers to expedite a planned joint mission to China to source for financial support for the railway line.

Each country will bear the cost of the project within its borders.

“We have written to the Chinese Government and are waiting for communication setting the date for the planned visit,” Mr Emmanuel Hatega, Uganda’s Northern Corridor Integration Projects coordinator was quoted by New Times of Rwanda saying.

Uganda was tasked with steering the process of sourcing for funds. The EAC partner states agreed that they would approach the Chinese with strong and bankable project proposals to encourage funders.

The arrangements for Phase 2 of the SGR come at a time when the International Monetary Fund (IMF) has warned Kenya to stop wasteful spending, noting that the State has already breached fiscal deficit targets.

 

East Africa should invest in own shipping vessels or lose billions in avoidable costs

Capesize cargo 12 small.jpgEast African Community countries and those of Central Africa are spending billions of dollars in freight costs on foreign-owned shipping firms that they would otherwise have used on their own.Between 2008 and 2012, Kenya, Tanzania, Uganda, Zambia, Malawi, Rwanda and Burundi paid $48.2 billion in freight costs, according to the Intergovernmental Standing Committee on Shipping (ISCOS).“These are colossal amounts of money. It is high time countries in East Africa explored the idea of investing in vessels,” ISCOS secretary Kenneth Mwige said, adding that apart from Ethiopia, most countries in Africa do not own ships.

Kenya paid $15.6 billion in the five years of the review, followed by Zambia and Tanzania, which spent $11.2 billion and $10.5 billion respectively.

“If EAC states are to grow their economies, they cannot afford to keep paying this kind of money to foreign companies. Their economies are growing and imports are increasing at an average rate of seven per cent annually, so these figures will keep rising,” said Mr Mwige.

ISCOS — an initiative of Kenya, Uganda, Tanzania and Zambia — plays a key advisory role on maritime matters.

According to Kenya Ports Authority statistics, the volume of cargo passing through Mombasa Port is projected to grow at between five and 10 per cent this year, that is, 27.36 million tonnes compared with the 24.875 million tonnes handled in 2014. Container traffic at the port is projected to rise from 1.012 million twenty-foot equivalent unit (teu) containers last year to 1.3 million teu this year, a 28.8 per cent increase.

According to Shippers Council of East Africa executive officer Gilbert Lang’at, countries should empower such entities as the Kenya National Shipping Line (KNSL) to purchase empty containers so that they can become involved in the shipping business.

Once cargo has been delivered to its destination, empty containers are supposed to be returned to the shipping line within a free period of 14 days for local and up to 45 days for transit cargo, failing to which they attract a charge called demurrage.

Shipping lines charge these fees differently, ranging between $7 and $14 per day depending on the size of the container. Returning empty containers takes time while demurrage charges come as added costs to importers.

“The cost of buying a vessel might be quite prohibitive but to begin with, if the government buys containers for KNSL, they will be in business since it is the most important component of importing and exporting goods,” he said.

The Kenya Maritime Authority, in a proposal to revamp KNSL, suggests that cabotage laws that support reservation of cargo for national carriers should be implemented.

“Ongoing endeavours to make the port of Mombasa a hub will greatly benefit a national shipping line operating under a cabotage regime while there will be savings on foreign exchange arising from use of own vessels for international carriage of goods,” the report says.
Source: The East African

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