Nipate
Forum => Kenya Discussion => Topic started by: RV Pundit on June 27, 2016, 11:53:01 AM
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http://www.nation.co.ke/news/Rail-construction-to-end-earlier-than-expected/-/1056/3269104/-/y5jw9fz/-/index.html
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When will we start paying for it?
http://www.nation.co.ke/news/Rail-construction-to-end-earlier-than-expected/-/1056/3269104/-/y5jw9fz/-/index.html
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It suppose to pay for itself. We got 5 yr grace period for part of loan that was given on "sweatheart" deal and 7 yr grace period for loan that is on commercial rate. The duration for repayment I think is 15-20yrs.
The idea is for railway to pay for itself...I think the cargo they need to do that..is about 28M tonnes...and so far we are importing 26M tonnes via Mombasa port or more than 1 million containers per annum...so this will pay for itself.
If we move 20M tonner per annum (say 70%) of that cargo though SGR at the current rate shs 20 per tonne per km..in distance of 500kms....then total revenue for the rail operator 200B kshs..but because the rail operator will be charge 2.5 less..charging 8shs per tonne..it will be able to about 80B revenues...remove running cost (fuel+labour+bla)...then this rail can make 50B profit on cargo alone...to be used to repay the loan. Throw in passenger traffic...and it could be a little more.
In the meantime the economy will benefit first from 120B savings (2.5 times less the transport cost), save time, less strain on nairobi-mombasa road, more cargo passing kenya because it cheaper and quicker than TZ, more juice generally for the economy given transport has multiplier effect.
When will we start paying for it?
http://www.nation.co.ke/news/Rail-construction-to-end-earlier-than-expected/-/1056/3269104/-/y5jw9fz/-/index.html
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Let us pray your numbers hold. All I know railways are very expensive to maintain and run. I can assure you your figures will not hold. You have not even factored things like maintance, personel expenses and running costs of the buildings and warehouses required.
It suppose to pay for itself. We got 5 yr grace period for part of loan that was given on "sweatheart" deal and 7 yr grace period for loan that is on commercial rate. The duration for repayment I think is 15-20yrs.
The idea is for railway to pay for itself...I think the cargo they need to do that..is about 28M tonnes...and so far we are importing 26M tonnes via Mombasa port or more than 1 million containers per annum...so this will pay for itself.
If we move 20M tonner per annum (say 70%) of that cargo though SGR at the current rate shs 20 per tonne per km..in distance of 500kms....then total revenue for the rail operator 200B kshs..but because the rail operator will be charge 2.5 less..charging 8shs per tonne..it will be able to about 80B revenues...remove running cost (fuel+labour+bla)...then this rail can make 50B profit on cargo alone...to be used to repay the loan. Throw in passenger traffic...and it could be a little more.
In the meantime the economy will benefit first from 120B savings (2.5 times less the transport cost), save time, less strain on nairobi-mombasa road, more cargo passing kenya because it cheaper and quicker than TZ, more juice generally for the economy given transport has multiplier effect.
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I did say... remove running cost (fuel+labour+bla). I have no doubt that this will pay for itself. Most of projections and thinking you're using is from the developed world..where growth is anemic. We are talking of a country that just double it's cargo every 10yrs...
There is no DOUBT that Mombasa-Nairobi SGR will be profitable. What is doubtfully is the NBO-Malaba esp with Uganda and Sudan playing games. There the cargo will have drop by another 50-60% coz most of the cargo is destined for Nairobi. Nairobi is the engine of our economy.
Even the rickety current rail line is now moving 1.5-2M tonnes of cargo every year.
Btw Nairobi-Malaba --I would go slow ---and try to renovate the current line -- and stick it up Museveni for screwing us up on the pipeline. It may be worthwhile to renovate and build new lines to 47 counties..than try to help Museveni move his cargo.
Let us pray your numbers hold. All I know railways are very expensive to maintain and run. I can assure you your figures will not hold. You have not even factored things like maintance, personel expenses and running costs of the buildings and warehouses required.
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After listening to likes of Nyakera on the cost of the 1 b km bypass- currency blah blah now he is on to 80% after 75% figure yet Zhao had put it at 60.9% as at May 2016.
Up to now, 252 kilometres of track have been laid and 634 T-beams erected, accounting for 40.97 per cent of the total quantity. In general terms, we can report about 60.9 per cent of the entire SGR project is complete, ahead of schedule. It’s on course for completion in 2017.
http://www.standardmedia.co.ke/business/article/2000202834/corporate-interview-china-road-and-bridge-corporation
These figures also point to viability of SGR and even more robust rail systems
Data from the Northern Corridor Transit and Transport Coordination Authority (NCTTCA) shows that at least 12,143 heavy commercial vehicles are weighed daily at five weighbridges within Kenya.
The quarterly Port Community Charter Report from January-March 2016 shows that in March, 5,583 trucks were weighed at the Athi River (Mlolongo) weighbridge; 2,507 in Mariakani; 2,655 in Gilgil; 965 in Webuye and 432 in Busia.
Most containers are destined for within Kenya
Add the corruption on the roads
This means that police officers manning one roadblock at Mlolongo and who receive a Sh50 bribe from every truck will collect Sh279,150 daily, Sh132,750 in Gilgil, Sh125,350 in Mariakani, Sh48,250 in Webuye and Sh21,600 in Busia.
The amount could be higher, considering the multiple roadblocks between weighbridges and also considering that some officers might demand a higher amount.
Driving over the speed limit attracts the largest bribe, which can go up to Sh5,000.
there is every rational incentive to use the rail as it makes business sense
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This is good data. But I don't understand why those in Athi would be double those in Mariakani. It obvious Nairobi-MSA make business sense. Outside Nairob-- Nairobi-Malaba is doubtful. Seem cargo drops by 50%. We may need go slow on that...and try work on metro in Nairobi...for passengers.
5,583 trucks were weighed at the Athi River (Mlolongo) weighbridge;
2,507 in Mariakani;
2,655 in Gilgil;
965 in Webuye and 432 in Busia
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Likely due to Industrial Area, EABL, milk supplies to Ukambani, Coast
This is good data. But I don't understand why those in Athi would be double those in Mariakani.
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Apparently the Nairobi-Naivasha line is already underway.
http://www.sebcrbc.com/news_show.htm?id=8599&classId=8
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These figures also point to viability of SGR and even more robust rail systems
Data from the Northern Corridor Transit and Transport Coordination Authority (NCTTCA) shows that at least 12,143 heavy commercial vehicles are weighed daily at five weighbridges within Kenya.
The quarterly Port Community Charter Report from January-March 2016 shows that in March, 5,583 trucks were weighed at the Athi River (Mlolongo) weighbridge; 2,507 in Mariakani; 2,655 in Gilgil; 965 in Webuye and 432 in Busia.
Most containers are destined for within Kenya
Add the corruption on the roads
This means that police officers manning one roadblock at Mlolongo and who receive a Sh50 bribe from every truck will collect Sh279,150 daily, Sh132,750 in Gilgil, Sh125,350 in Mariakani, Sh48,250 in Webuye and Sh21,600 in Busia.
The amount could be higher, considering the multiple roadblocks between weighbridges and also considering that some officers might demand a higher amount.
Driving over the speed limit attracts the largest bribe, which can go up to Sh5,000.
there is every rational incentive to use the rail as it makes business sense
Somewhat shaky analysis ... to my mind. It is a bit like looking at the total amounts that coppers would collect if they stopped every ordinary car on the road and collected Sh. 50 from each, and on that basis, arguing that everyone would be better off taking a plane.
* Let us assume that they do---and we know they don't---stop every car. One would have to look at how many times the "average" car was stopped, add up the total amount, and consider the cost of a plane ticket. (In the present case, it is not every truck paying all those figures at every roadblock or whatever.) How many Kenyans consider that it would be cheaper to fly than to pay bribes on the road? In general: total costs have to be considered, and on a more "fine-grained" basis.
There is also some confusion between weighbridges and "ordinary" roadblocks; there are fewer of the former, but the cost-per-stop is higher. Still, if we accept the confusion/assumption that every weighbridge corresponds to a roadblock, and there are 5 of them, then one truck only coughs up a total of Sh. 250. Is that enough to drive them from the roads to the railway? (See also third point below.)
* Bribes on the road actually account for very little of the overall transportation costs. We know that because the matter has been carefully considered: The main consultancy company that was hired by the East African countries for their "Railway Master Plan" was the Canadian company, CPCS, which has international repute in this regard and which is continuing to work for the EAC countries on an "Enhanced Railway Plan". CPCS looked into the matter in detail for Kenya, counted weighbridges and roadblocks, calculated how much is forked out where, etc. and concluded that the money given to drivers for food+hotel+bribes+incidentals came to around 5% of the total cost. (The major cost from weighbridges and roadblocks is due to delays.)
* There seems to be the assumption that those paying bribes at weighbridges, which is where the huge bribes are dished out, are all solid, upright citizens who are reluctant to do so and who resent the "business". That is not so. Most of those paying are doing so to get away with overloading. As long as they consider that their "savings" in that regard (taking into account the cost of delays) are significant, why would anyone expect them to stop and switch to the railways?
* I have noted the optimistic reports on Mombasa port. These reports seem to assume that as long as the economy is growing, cargo into the port will keep growing. Not so, I'm afraid; there's the little matter of hard constraints imposed by nature: This is a shallow-water port. That means it cannot accommodate very large ships, and there is a limit to how many smaller ships it can handle within a given period. There seems to be little room to move past the last dredging of the port.
(Arguments on volume of cargo coming into ports would, if they could, have more strength if, say, they were based on what Lamu Port might be, with an extension to the SGR running from there, and so on and so forth.)
* I have also noted equally optimistic claims on what can be moved from the roads to the railways. Implicit in these is the assumption that the truckers will quietly let their livelihoods go, e.g. that they would not price their services to be competitive (and that's taking into account all the "something small", the delays, etc.). I wouldn't bet on it.
One figure I have seen here is 70%. I don't know where that figure comes from; the government's own consultant puts it at a high of 30%. And this is on the basis of figures provided by the government, not some made-up figures from a place with "anemic" growth. (See the next point.)
* One of the most interesting things I've learned while trying to make sense of this SGR business: a little about logistics. It turns out that just having X tonnes come off a ship on Day Y doesn't mean that one can immediately plonk it onto the railway line attached to the port and it will arrive at the destination within the time specified in government manuals. One needs enough wagons, with enough capacity, at a certain frequency, etc., etc. etc. And things get very tricky when the railway is one-track .... which leads to container depots and then more of them. (Very dull stuff, I admit, but it turns out that Kenya has one of two problems in this regard.) Etc. etc. etc., the essence of which is that having so many "movable" tonnes per year is actually quite a different matter from actually being able to move so many tonnes per year .... and the competition steps in ....
* There has also been some funny reasoning in relation to what % of cargo goes where. Without getting into details, we should note that charges are by distance, so 1% to Nairobi is not entirely the same as 1% to Malaba.
Will SGR make money, even up to Nairobi? We'll have to wait and see .... so far the government has been rather coy when it comes to what the charges would be, per tonne or whatever, per kilometre or whatever. Etc. etc. etc. But I have noted the out-of-nowhere Nipatean figures.
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Look like Moonki went and looked up for all the worst case scenarios to reinforce his view on the SGR. The cargo at Mombasa port now (1M plus containers or 26M tonnes of cargo) is enough to support SGR. The rickety RVR is already moving 1.6m tonnes. Mombasa port still has a long way before "nature" kick in. Of course that is nonsensical because we can dredge the port to make it deeper. New rail operator according to gov sources (which you can google) will transport cargo at 8shs per tonne per kilometer compared to current 20shs per tonne per km. I don't think trucks will be able to compete at those prices. They will move inland to transport cargo to areas without the rail. Pick cargo in Nairobi and transport it to Nyeri etc.
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Look like Moonki went and looked up for all the worst case scenarios to reinforce his view on the SGR. The cargo at Mombasa port now (1M plus containers or 26M tonnes of cargo) is enough to support SGR. The rickety RVR is already moving 1.6m tonnes. Mombasa port still has a long way before "nature" kick in. Of course that is nonsensical because we can dredge the port to make it deeper. New rail operator according to gov sources (which you can google) will transport cargo at 8shs per tonne per kilometer compared to current 20shs per tonne per km. I don't think trucks will be able to compete at those prices. They will move inland to transport cargo to areas without the rail. Pick cargo in Nairobi and transport it to Nyeri etc.
Actually the 30% is not the worst-case scenario; that is CPCS's best-case figure, and they too know the capacity of Mombasa port. On dredging, I noted that above. As for government figures, I have seen those figures in the papers; which government sources are you referring to? What I would like to see is something resembling an economic-feasibility study with those figures as the basis. Google is unable to help me with that; can you point me to the right government sources?
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You're quoting a shit report (CPCS) that was written nearly 10yr ago! In 2009 Mombasa had 0.6M containers passing thro' Mombasa..now that has doubled to 1.1M . Do you think the shitty CPCS saw that? By 2019...we will be moving maybe 2M containers! Going by that report; you can see in 80s we transported 5m tonnes of cargo. Long story short... this is kind of report that is designed for RvR and old rail line.
We are talking a Standard Gauge Railway project which alter the logistics game completely. SGR is designed to transport 22M tonnes in few yrs...I think it will start transport more than that when it get launched next year. Already Mombasa port (now forth busiest port in Africa) is moving 26M tonnes of cargo....and once the railway start operating...the trucks will have to go to Nairobi or elsewhere to find business
Reason
1) SGR -CRBC (China) running for initial 5yr ...will deliver cargo in 1 day to Nairobi -@80Kms speed.
2) SGR - will charge 2.5 times less than now....about 8shs.
Source: Gov who are in charge of SGR.
Kenya has previously said the new railway will cut freight costs to 8 US cents a metric tonne (1.1 tonnes) per kilometre from the current 20 cents. Most cargo is currently hauled by road.
It is expected the line will increase the speed of freight trains from a maximum 40 kilometres per hour (kph) to 80kph. Passenger trains will be moving at a speed of 120kph, cutting down travel time considerably.
Nairobi-MSA line is self-evidently profitable. The cargo will be dumped in the huge inland/dry port being built in Nairobi's Embakasi @cost of 20B and that is where trucks will find business to do.
Actually the 30% is not the worst-case scenario; that is CPCS's best-case figure, and they too know the capacity of Mombasa port. On dredging, I noted that above. As for government figures, I have seen those figures in the papers; which government sources are you referring to? What I would like to see is something resembling an economic-feasibility study with those figures as the basis. Google is unable to help me with that; can you point me to the right government sources?
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You're quoting a shit report (CPCS) that was written nearly 10yr ago! Going by that report; you can see in 80s we transported 5m tonnes of cargo.
Which report did you have in mind and what is the date on it? I ask because CPCS is continuing as a consultant and has produced several reports on their task; the latest ones I have seen are from 2015.
Source: Gov who are in charge of SGR.
Kenya has previously said the new railway will cut freight costs to 8 US cents a metric tonne (1.1 tonnes) per kilometre from the current 20 cents. Most cargo is currently hauled by road.
As I said, I have seen those figures. What I asked for:
What I would like to see is something resembling an economic-feasibility study with those figures as the basis. Google is unable to help me with that; can you point me to the right government sources?
Do you actually know how the Sh. 8 per tonne-kilometer was arrived at? Was it based on an economic-feasibility study? Is the US 0.20 the road costs or the costs on the current railway?
Nairobi-MSA line is self-evidently profitable.
Self-evident to whom? I'd rather have figures than blanket assertions.
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Why do you care about the technical details? Gov has promised 8shs (8 cents) per tonne per km instead of the current 20shs that RVR and trucks charge. Gov owns SGR including the trains. The chosen operator I believe has to stick with gov prices. Which are 2.5 times less than what is charged now...and so if anyone want to move cargo at those prices....the economy is the winner..and gov is more than happy....and even happier if it get moved quickly.
Do you actually know how the Sh. 8 per tonne-kilometer was arrived at? Was it based on an economic-feasibility study? Is the US 0.20 the road costs or the costs on the current railway?
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Why do you care about the technical details? Gov has promised 8shs per tonne per km instead of the current 20shs that RVR and trucks charge. Gov owns SGR including the trains. The chosen operator I believe has to stick with gov prices.
I care about the details because I want to look into the self-evident claims. Where did you get the idea that trucks charge that much? And what is the basis of your earlier statement:
I don't think trucks will be able to compete at those prices.
I'm sure the operator will stick to government prices; what I'm more interested is economic viability (with huge loans to pay) at those prices.
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Ohoo boy where else apart from the net. In 2009 when I was in interested in trucking business; I knew the price was 8shs per tonner per km. So a container from Mombasa to Nairobi weigh 20tonnes would cost 500kms*8*20 (80,000ksh). The same price it cost to transport the container from Japan or China to Kenya....some 5,000 miles away.Which is why SGR had to be done. Now it seem to have become 20shs [again according to gov sources].
I care about the details because I want to look into the self-evident claims. Where did you get the idea that trucks charge that much? I'm sure the operator will stick to government prices; what I'm more interested is economic viability (with huge loans to pay) at those prices.
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Ohoo boy where else apart from the net. In 2009 when I was in interested in trucking business; I knew the price was 8shs per tonner per km ... Now it seem to have become 20shs [again according to gov sources].
You will note that I asked you whether the Sh. 20 was the rate on the current rail or the rate on trucks. Which government source says it is the rate on trucks?
Earlier you stated that the rate on the SGR will be Sh. 8 per tonne-kilometer. So how does this calculation of yours apply to the SGR?
So a container from Mombasa to Nairobi weigh 20tonnes would cost 500kms*8*20 (80,000ksh). The same price it cost to transport the container from Japan or China to Kenya....some 5,000 miles away.
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I quoted gov sources quoted by BusinessDaily. I am not aware of the details beyond that. Maybe you can fish this out from CPCS?
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I quoted gov sources quoted by BusinessDaily. I am not aware of the details beyond that. Maybe you can fish this out from CPCS?
Indeed I can; but, as usual, it has been amusing to read your arguments.
The figure of Sh. 8 per tonne-kilometre is not based on any economic-feasibility study carried out by the government. That's just a figure CPCS gave them last year. CPCS argued that in order to get market share, the rail should start by charging slightly less than the truckers. According to CPCS's studies, the truckers charge Sh. 9 to Sh. 11 per tonne-kilometer; so CPCS proposed Sh. 7 to Sh. 8 per tonne-kilometre to start with.
Start because CPCS then recommended that once the rail had business, it should raise its prices to near those charged by the truckers. So, will truckers be able to compete on price? Will people "automatically" save big bucks by going from road to rail?
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Interesting. I have heard gov sources repeat this claim that transport cost will reduce by 2.5 times several times. Yeah 20shs does sound like a lot...and unreleastic...and maybe somebody in gov is lying.
Indeed I can; but, as usual, it has been amusing to read your arguments.
The figure of Sh. 8 per tonne-kilometre is not based on any economic-feasibility study carried out by the government. That's just a figure CPCS gave them last year. CPCS argued that in order to get market share, the rail should start by charging slightly less than the truckers. According to CPCS's studies, the truckers charge Sh. 9 to Sh. 11 per tonne-kilometer; so CPCS proposed Sh. 7 to Sh. 8 per tonne-kilometre to start with.
Start because CPCS then recommended that once the rail had business, it should raise its prices to near those charged by the truckers. So, will truckers be able to compete on price? Will people "automatically" save big bucks by going from road to rail?
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Just seen an advert by KTDA where they were charging 6.5shs per tonne per kilometre to transport fertlizers (74,000 metric tonnes). So SGR will have to go way down..maybe 5shs?
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Just seen an advert by KTDA where they were charging 6.5shs per tonne per kilometre to transport fertlizers (74,000 metric tonnes). So SGR will have to go way down..maybe 5shs?
For cargo which isn't expected to be delivered fast, am wondering how SGR will be cheaper than RVR.
In deed SGR uganda claim the freight cost will be below 5 USA cents per tonne/km.
https://mobile.facebook.com/SGRUganda/photos/a.859817044053512.1073741828.843300635705153/970127246355824
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In my opinion it costs much less to transport goods by rail than truck. One rail wagon wan take 5 trucks or more so imagine the savigs!!!
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Yeah if they can get us 3-5shs then we should be somewhere. I don't see why we can't do this..esp with diesel at it very lowest..and the loan terms are favourable. The new train operator has to deliver 3-5shs and kenya will have solve one of it's biggest bottleneck...very expensive transport cost.
For cargo which isn't expected to be delivered fast, am wondering how SGR will be cheaper than RVR.
In deed SGR uganda claim the freight cost will be below 5 USA cents per tonne/km.
https://mobile.facebook.com/SGRUganda/photos/a.859817044053512.1073741828.843300635705153/970127246355824
In my opinion it costs much less to transport goods by rail than truck. One rail wagon wan take 5 trucks or more so imagine the savigs!!!
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In deed SGR uganda claim the freight cost will be below 5 USA cents per tonne/km.
https://mobile.facebook.com/SGRUganda/photos/a.859817044053512.1073741828.843300635705153/970127246355824
I wouldn't make too much of a one-line statement by some random character on Facebook.
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Doesn't seem like a wild guess..does it?
In deed SGR uganda claim the freight cost will be below 5 USA cents per tonne/km.
https://mobile.facebook.com/SGRUganda/photos/a.859817044053512.1073741828.843300635705153/970127246355824
I wouldn't make too much of a one-line statement by some random character on Facebook.
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