Nipate
Forum => Kenya Discussion => Topic started by: RV Pundit on January 20, 2018, 10:52:55 AM
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This is for 3 months - promotional -
https://www.businessdailyafrica.com/news/Kenya-Railways-reduces-SGR-freight-charge/539546-4270470-1ibkwv/index.html
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We're gonna be paying for this for decades.
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Interesting. Though subsidies don't end up well, it will be interesting to see the unintended consequences for KRA and taxes.
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It not really subsidy if you consider RDL (Railway Development Levy) that every importer is charged is a lot of money - so I don't see any problem if gok was to subsdidy this - the economy will benefit because you can imagine savings of nearly 50-80K for 1m containers - is nearly 50-80B annually.
Interesting. Though subsidies don't end up well, it will be interesting to see the unintended consequences for KRA and taxes.
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With the first cargo trip now done, we need to further understand why this is the whitest of all white elephants Kenya has ever done.
The objective of the train was to expand cargo capacity and increase speed of transport.
Let’s start with cargo, at its peak SGR is expected to do only 6million tonnes according to the contract. We currently have an ever increasing throughput at the port of about 27million tonnes. That means we spent $4B dollars to deal with less than 23% of the problem. In 5 years, with the growth, it will be virtually handling less than 10% of all the cargo, thus doesn’t solve any problem. Trucks bado ndizo hizo.
Secondly, a truck charges 70k per container, it gets the container to your doorstep. SGR dropping the cargo at the ICD at embakassi means you have to personally do “last mile” transportation. This is anywhere from 15k to 30k. This means it gets more expensive than trucks while increasing logistical hurdles. For the cargo to further reach ksm or border, you will have to get it back on a truck again.
Then there’s the empty containers, most transporters give you a deal that includes bringing the empty container back, the SGR does not solve that problem. You will be backed up with empty containers at your business premise, that you still have to pay trucks to return. Empty containers have a cost to them.
The option on the world bank report was to refurbish the entire country network at 40B, a tenth of what was spent on the SGR, and would have increased network rail coverage by 60%. Currently the old rail does 900,000 tonnes out of a maximum capacity of 5M tonnes. We haven’t even exhausted the old rail capacity as we celebrate new capacity.
Then there’s the issue of the 600M barrels of oil and 1.2Billion barrels of oil in Turkana different blocks. Ready for export as crude. It would have made more economic sense to extend the old line to the oil fields and transport by rail once the Uganda/Total pipeline deal did not work out. Instead you have contracted “trucks” to ferry crude almost 1000kms from turkana to the port.
Then there’s the issue of speed. The delays in cargo reaching destination is not from transportation, it is from port throughput metrics. Like cargo dwell time, available yard spaces, number and size of berths, working hours and days, number and efficiency of handling equipment, container terminal yard capacity, labor productivity, etc So building a standard gauge railway does not solve these problems.
The old rail used to terminate in town and industrial area in Nairobi, kisumu, nakuru and eldoret. This one terminates in syokimau and embakassi ICD. That has a maximum capacity of 400,000 Teus, that can be expanded by very little because of lack of available space. Then there’s the issue of traffic from embakassi, imagine an extra 1000 trucks trying to get cargo from embakassi ICD, imagine the traffic.
I live in msa where 6000 trucks come in and out everyday to the port. Anyone who knows Jomvu/Miritini area knows what a nightmare this is. Embakassi is headed there.
Finally, I won’t go into the contracting, the nature of guarantees that will inevitably beggar you and your children’s children, (the Railway development levy -RDL, the rail subsidy Kshs 15B), or the terms of the loans (who builds a railway at commercial interest rates?), the issue of the dry port from Mombasa to naivasha, the nature of engineering of the tunnels and the route (why they are collapsing) , and KPAs death kiss from Kenya Railways and the Jubilee government by guaranteeing a “take or pay” contract that’s unguaranteeable. (Prepare for port to go to China the sri lankan way).
There’s even a brewing scandal as to whether the SGR can do the claimed 6M tonnes. (It was supposed to be designed for stacking containers - rumors that it cannot stack containers for transport as claimed)
This was the whitest of white elephants. A daft project.
Dr. Nyangasi Nyangasi
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Cooke,
You must not sabbotage ouru transformation project by peddling rumours and hearsay :)
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This is the idiot who came up with computer generated theory. He should have tried do his job - medical doctor - not try pass as some know-it-all doctor. He can only impress D- Joho.
With the first cargo trip now done, we need to further understand why this is the whitest of all white elephants Kenya has ever done.
The objective of the train was to expand cargo capacity and increase speed of transport.
Let’s start with cargo, at its peak SGR is expected to do only 6million tonnes according to the contract. We currently have an ever increasing throughput at the port of about 27million tonnes. That means we spent $4B dollars to deal with less than 23% of the problem. In 5 years, with the growth, it will be virtually handling less than 10% of all the cargo, thus doesn’t solve any problem. Trucks bado ndizo hizo.
Secondly, a truck charges 70k per container, it gets the container to your doorstep. SGR dropping the cargo at the ICD at embakassi means you have to personally do “last mile” transportation. This is anywhere from 15k to 30k. This means it gets more expensive than trucks while increasing logistical hurdles. For the cargo to further reach ksm or border, you will have to get it back on a truck again.
Then there’s the empty containers, most transporters give you a deal that includes bringing the empty container back, the SGR does not solve that problem. You will be backed up with empty containers at your business premise, that you still have to pay trucks to return. Empty containers have a cost to them.
The option on the world bank report was to refurbish the entire country network at 40B, a tenth of what was spent on the SGR, and would have increased network rail coverage by 60%. Currently the old rail does 900,000 tonnes out of a maximum capacity of 5M tonnes. We haven’t even exhausted the old rail capacity as we celebrate new capacity.
Then there’s the issue of the 600M barrels of oil and 1.2Billion barrels of oil in Turkana different blocks. Ready for export as crude. It would have made more economic sense to extend the old line to the oil fields and transport by rail once the Uganda/Total pipeline deal did not work out. Instead you have contracted “trucks” to ferry crude almost 1000kms from turkana to the port.
Then there’s the issue of speed. The delays in cargo reaching destination is not from transportation, it is from port throughput metrics. Like cargo dwell time, available yard spaces, number and size of berths, working hours and days, number and efficiency of handling equipment, container terminal yard capacity, labor productivity, etc So building a standard gauge railway does not solve these problems.
The old rail used to terminate in town and industrial area in Nairobi, kisumu, nakuru and eldoret. This one terminates in syokimau and embakassi ICD. That has a maximum capacity of 400,000 Teus, that can be expanded by very little because of lack of available space. Then there’s the issue of traffic from embakassi, imagine an extra 1000 trucks trying to get cargo from embakassi ICD, imagine the traffic.
I live in msa where 6000 trucks come in and out everyday to the port. Anyone who knows Jomvu/Miritini area knows what a nightmare this is. Embakassi is headed there.
Finally, I won’t go into the contracting, the nature of guarantees that will inevitably beggar you and your children’s children, (the Railway development levy -RDL, the rail subsidy Kshs 15B), or the terms of the loans (who builds a railway at commercial interest rates?), the issue of the dry port from Mombasa to naivasha, the nature of engineering of the tunnels and the route (why they are collapsing) , and KPAs death kiss from Kenya Railways and the Jubilee government by guaranteeing a “take or pay” contract that’s unguaranteeable. (Prepare for port to go to China the sri lankan way).
There’s even a brewing scandal as to whether the SGR can do the claimed 6M tonnes. (It was supposed to be designed for stacking containers - rumors that it cannot stack containers for transport as claimed)
This was the whitest of white elephants. A daft project.
Dr. Nyangasi Nyangasi
With the first cargo trip now done, we need to further understand why this is the whitest of all white elephants Kenya has ever done.
The objective of the train was to expand cargo capacity and increase speed of transport.
Let’s start with cargo, at its peak SGR is expected to do only 6million tonnes according to the contract. We currently have an ever increasing throughput at the port of about 27million tonnes. That means we spent $4B dollars to deal with less than 23% of the problem. In 5 years, with the growth, it will be virtually handling less than 10% of all the cargo, thus doesn’t solve any problem. Trucks bado ndizo hizo.
Secondly, a truck charges 70k per container, it gets the container to your doorstep. SGR dropping the cargo at the ICD at embakassi means you have to personally do “last mile” transportation. This is anywhere from 15k to 30k. This means it gets more expensive than trucks while increasing logistical hurdles. For the cargo to further reach ksm or border, you will have to get it back on a truck again.
Then there’s the empty containers, most transporters give you a deal that includes bringing the empty container back, the SGR does not solve that problem. You will be backed up with empty containers at your business premise, that you still have to pay trucks to return. Empty containers have a cost to them.
The option on the world bank report was to refurbish the entire country network at 40B, a tenth of what was spent on the SGR, and would have increased network rail coverage by 60%. Currently the old rail does 900,000 tonnes out of a maximum capacity of 5M tonnes. We haven’t even exhausted the old rail capacity as we celebrate new capacity.
Then there’s the issue of the 600M barrels of oil and 1.2Billion barrels of oil in Turkana different blocks. Ready for export as crude. It would have made more economic sense to extend the old line to the oil fields and transport by rail once the Uganda/Total pipeline deal did not work out. Instead you have contracted “trucks” to ferry crude almost 1000kms from turkana to the port.
Then there’s the issue of speed. The delays in cargo reaching destination is not from transportation, it is from port throughput metrics. Like cargo dwell time, available yard spaces, number and size of berths, working hours and days, number and efficiency of handling equipment, container terminal yard capacity, labor productivity, etc So building a standard gauge railway does not solve these problems.
The old rail used to terminate in town and industrial area in Nairobi, kisumu, nakuru and eldoret. This one terminates in syokimau and embakassi ICD. That has a maximum capacity of 400,000 Teus, that can be expanded by very little because of lack of available space. Then there’s the issue of traffic from embakassi, imagine an extra 1000 trucks trying to get cargo from embakassi ICD, imagine the traffic.
I live in msa where 6000 trucks come in and out everyday to the port. Anyone who knows Jomvu/Miritini area knows what a nightmare this is. Embakassi is headed there.
Finally, I won’t go into the contracting, the nature of guarantees that will inevitably beggar you and your children’s children, (the Railway development levy -RDL, the rail subsidy Kshs 15B), or the terms of the loans (who builds a railway at commercial interest rates?), the issue of the dry port from Mombasa to naivasha, the nature of engineering of the tunnels and the route (why they are collapsing) , and KPAs death kiss from Kenya Railways and the Jubilee government by guaranteeing a “take or pay” contract that’s unguaranteeable. (Prepare for port to go to China the sri lankan way).
There’s even a brewing scandal as to whether the SGR can do the claimed 6M tonnes. (It was supposed to be designed for stacking containers - rumors that it cannot stack containers for transport as claimed)
This was the whitest of white elephants. A daft project.
Dr. Nyangasi Nyangasi
-
Cooke,
You must not sabbotage ouru transformation project by peddling rumours and hearsay :)
I’m not and I can pick a few half-truths without trying too hard
What I agree with the writer is on the additional costs of getting the containers from Embakasi ICD to the customer
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Now that Tz is connecting to Rwanda and Ug to South Sudan, then there must be consequences.