DP Ruto: Why it costs Sh1 billion a month to run SGR
Deputy President William Ruto has explained why Kenyan taxpayers are coughing out a whooping Sh1 billion a month to run Madaraka Express trains.
Mr Ruto, in an interview on NTV Sunday, said the Madaraka Express that runs on Standard Gauge Railway (SGR) between Nairobi and Mombasa was a huge operation.
“It costs a billion to run the SGR. The SGR my friend is not a matatu. The SGR is a huge operation,” said the DP.
He said taxpayers were getting value for money.
“And for the record, today, we have seven cargo trains every day on the SGR. By December, we will have 12 trains every day on the SGR carrying cargo. And the good news is that by the end of this year, the SGR will have broken even.”
Mr Ruto maintained that some of Kenya’s neighbours with SGR and “who started before us are not where we are”.
“They are operating one train a day,” he said.
“And the good news is by the time we get to 2020 when we begin to repay the loan, it will not be from the Kenyan exchequer. The SGR will pay for itself.”
Kenya in May 2014 entered into a deal to borrow $3.233 billion loan (Sh324.01 billion) from China’s Exim Bank, comprised of $1.633 billion commercial loan and $1.6 billion concessional to build the 385km modern railway between Mombasa and Nairobi.
The loan, whose interest is 3.6 percentage points above the six months average of London Inter Bank Offered Rate (Libor) which serves as an international benchmark, is to be repaid in 15 years with a grace period of five years.
According to the 2018 Economic Survey 2018 by the Kenya National Bureau of Statistics, the number of passengers handled by the SGR was 689,205, while revenue earned from the SGR passenger service stood at Sh590.2 million at the end of 2017.
Earnings from passenger traffic increased more than five times from Sh134 million in 2016 to Sh700 million in 2017. The overall increase in passenger journeys and revenue from passenger service is mainly due to the Standard Gauge Railway (SGR) passenger service that commenced in the second half of 2017, says the report.
“If there’s one decision that the Jubilee administration made, that was correct and sound, it is the SGR. The investment and we are very proud of it and it is taking this country places,” said Mr Ruto.