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Hard times for SGR as port operations return to Coast – Business Daily

A truck is loaded at the Naivasha Inland Container Depot in January. FILE PHOTO | NMG
President William Ruto has returned all port operations transferred to Nairobi and Naivasha Inland Container Depots (ICDS) to Mombasa, reversing one of the most controversial policies of the Jubilee administration.
To ensure that the Standard Gauge Railway (SGR) has minimum guaranteed business to repay the Sh450 billion debt taken to build it, the Uhuru Kenyatta administration forced traders to use the modern railway line, a policy that saw the government transfer clearance to enforce compliance.
Speaking on Tuesday during his inauguration, Dr Ruto said the move is aimed at restoring thousands of jobs that had been lost in Mombasa.
“This afternoon, I will be issuing instructions for clearance of all goods and other attendant operational issues to revert to the port of Mombasa. This restores thousands of jobs in the city of Mombasa,” said Mr Ruto.
Former President Uhuru Kenyatta in 2019 launched the extended SGR freight services from Mombasa to the Naivasha ICD, promising faster transportation of cargo to western Kenya and on to neighbouring countries.
He also put in place various policies to protect the SGR but ended up hurting transporters who lost thousands of jobs at the Kenyan coast.
The directive is also likely to hurt the businesses that had set up in Naivasha after the directive.
The Naivasha ICD was at the heart of Kenya’s ambition to become the transport corridor of choice for neighbouring countries like Tanzania and Uganda.
The State also launched in the same year the upgraded ICD in Nairobi to promote efficient transportation of bulk cargo from the port of Mombasa to the hinterland.
The Nairobi ICD that was built by the China Roads and Bridge Corporation (CRBC) was expected to decongest the port of Mombasa while lowering the cost of transporting goods.
But both moves did not go down well with cargo owners who are being forced to ferry their goods to Nairobi or Naivasha via the SGR for onward clearance.
Cargo transporters protested the directive, saying the government’s move would raise the cost of doing business, with the costs passed on to consumers.
The government was also accused of issuing the directive without engaging stakeholders and addressing the inefficiencies associated with the port and the Inland Container Depot (ICD) in Nairobi.
To date, an appeal challenging orders quashing the directives requiring all cargo be transported to Nairobi and the hinterland exclusively through the SGR is yet to be determined by the Court of Appeal.
The appellate court last November suspended the execution of orders quashing the directive issued by a five-judge bench of the High Court, pending hearing and determination of the appeal filed by the Kenya Ports Authority (KPA).
The KPA argued that the directives were meant to operationalise the take-and-pay agreement, which is key to ensuring the loan for the construction of the modern railway line is repaid without many hitches.
According to the take-and-pay agreement, KPA undertook to consign to Kenya Railways a set volume of freight and cargo.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.