?s=19The Standard Gauge Railway (SGR) made a Sh9.89 billion loss in its first year of operation, according to the latest figures from the Ministry of Transport. ...averaged a monthly loss of Sh750.7 million in the 2017/18 financial year.https://t.co/jFmMWRfQej
— Mzalendo Halisi Foundation (@UtuNaUzalendoKE) July 18, 2018
cc @DavidNdii
?s=19The Standard Gauge Railway (SGR) made a Sh9.89 billion loss in its first year of operation, according to the latest figures from the Ministry of Transport. ...averaged a monthly loss of Sh750.7 million in the 2017/18 financial year.https://t.co/jFmMWRfQej
— Mzalendo Halisi Foundation (@UtuNaUzalendoKE) July 18, 2018
cc @DavidNdii
The first six months of 2017 - it was trial ran - but train operator has to be paid - and this year we began from one train to 7 trains.?s=19The Standard Gauge Railway (SGR) made a Sh9.89 billion loss in its first year of operation, according to the latest figures from the Ministry of Transport. ...averaged a monthly loss of Sh750.7 million in the 2017/18 financial year.https://t.co/jFmMWRfQej
— Mzalendo Halisi Foundation (@UtuNaUzalendoKE) July 18, 2018
cc @DavidNdii
Pundit
As long as the cargo bit isnt making a dime, the whole thing is money in a dumpster.
The moment Rwanda, Uganda and South Sudan opted out and looked for cheaper routes was the moment the SGR officially became a white elephant. They could have beaten those East African neighbors by rushing to Kigali and Bujumbura via Uganda. South Sudan is a hole in the bush whose economy is deeply tied to Sudan and is just hot air for now. Investing in Lapsset because of South Sudan makes sense if you intend to make profit 50 years from now.
As it were by the time the railway reaches Uganda their own would have been running for a few years. The competition will be a blow to SGR. The most viable option is to stretch all the way to DRC. But that requires a lot. May be we should start sending feelers to Bemba or Kabila. One of them will be the president. I got my money on Bemba. He is ruthless and Kabila fears him.The first six months of 2017 - it was trial ran - but train operator has to be paid - and this year we began from one train to 7 trains.?s=19The Standard Gauge Railway (SGR) made a Sh9.89 billion loss in its first year of operation, according to the latest figures from the Ministry of Transport. ...averaged a monthly loss of Sh750.7 million in the 2017/18 financial year.https://t.co/jFmMWRfQej
— Mzalendo Halisi Foundation (@UtuNaUzalendoKE) July 18, 2018
cc @DavidNdii
I think you're tying yourself in knots with regional matters. SGR NBO-MSA is super-viable and super-profitable. The one from Nairobi to Malaba or Kisumu will struggle to pay for itself. After we get to Malaba or Kisumu - it's upto Uganda to take over or not - but generally we have Uganda cargo (about 25% of mombasa cargo) that we can ferry all the way to their border and that makes the NBO-KSM/Malaba - at least assured of traffic.
NBO-MSA - nobody should worry about that - it on steroid - six months later we are on 7 cargo trains - Ethiopia with electrified SGR - 2yrs later are still on first train. This year the rail is expected to turn "profit" of 5B. It will be making extra 400M per month in 2018/2019. In 2019/2020 when we start repaying it will be making 1B per month. All these using the current very low tariffs of 25K for TEU/35 for 40 feet container...so we will make about 15B from third year of operations - all that is enough to pay for loan. If you imagine we borrowed 320B for 20yrs - say with interest we will be repaying 400B - that on annuall basis is close to repaying 20B every year to Chinese - and therefore slighly raising the tarriff should repay this loan.
The good thing RDL will continue - and at 1.5% - we are already raising more than enough money to continue building more railways.
What are the terms of the loans?
First, a fixed term of 15 years, inclusive of a grace period of five years.
Second, interest of six months of the London Inter-Bank Offered Rate (Libor) plus 360 basis points. That comes to about four per cent.
Third, a management fee of 0.75 per cent payable up-front plus a commitment fee of 0.75 per cent of the undisbursed amount.
Finally, insurance from the China Export and Credit Insurance Corporation (Sinosure) at a premium of 6.93 per cent payable in two instalments.
Thus, the all-inclusive cost of servicing these Chinese loans comes to an effective interest rate of 12.5 per cent.
DEBT on market rate is our new reality post 2014 rebasing.We dont qualify for ldc loans for countries anymore.The issue is not the interest rate of the debt, its the amount and for what purpose. Treasury borrowed money and the projects that the money was borrowed for hasn't kicked in to service the debt. The horrible part is that treasury has few tools to kick start private sector growth.
HK:
A question for you: I was staggered to learn that Kenyans are being forced to put their stuff on the SGR. What is the legal basis for that? Why isn't anybody suing?
You are absolutely right on the cost of Chinese loans. Some people look at the interest rates while ignoring the insurance rates, which is where the real "meat" is. Whether one is paid in two installments and the other is paid over years has no effect on the rates. What's more, the insurance is pretty much free money for the Chinese because it will never be called on: "in theory", if Kenya defaults, then the insurance pays, and that's that; in practice, there will be no default because Kenya would then find borrowing from anywhere else to be impossible. That's why some hand over chunks of their country rather than default.
Win-win for Kung Fu while Kenyans ride trains painted in their national colours, SGR staff wear uniforms in their national colours, and others works are subject to the racism that seems to be deeply set in Kung Fu's psyche, etc. Rear-end tarimbo all the way.
HK:I think someone can sue under economic rights. SGR loan, the Chinese also charge management fee paid monthly. This is another avenue that the chinese are using to make money even though Kenyans can run it.
A question for you: I was staggered to learn that Kenyans are being forced to put their stuff on the SGR. What is the legal basis for that? Why isn't anybody suing?
You are absolutely right on the cost of Chinese loans. Some people look at the interest rates while ignoring the insurance rates, which is where the real "meat" is. Whether one is paid in two installments and the other is paid over years has no effect on the rates. What's more, the insurance is pretty much free money for the Chinese because it will never be called on: "in theory", if Kenya defaults, then the insurance pays, and that's that; in practice, there will be no default because Kenya would then find borrowing from anywhere else to be impossible. That's why some hand over chunks of their country rather than default.
Win-win for Kung Fu while Kenyans ride trains painted in their national colours, SGR staff wear uniforms in their national colours, and others works are subject to the racism that seems to be deeply set in Kung Fu's psyche, etc. Rear-end tarimbo all the way.