Ichungwah nails it - SGR is already viable - 60-70% of cargo terminate in NBO

[RV Pundit]

• Tweet

https://www.the-star.co.ke/news/2019-05-04-sgr-is-viable-without-going-to-naivasha-or-kisumu/

[Nefertiti]

That you struggle to find evidence of viability... from a politician not an economist. what does that say?

[Nefertiti]

Pundit could always show just one CREDIBLE person who vouches for the SGR. You are hardpressed to find a Dr Ndemo or such - not Ichung'wa or Nyoro - Ruto sycophants.

[Kim Jong-Un's Pajama Pants]

Pundit could always show just one CREDIBLE person who vouches for the SGR. You are hardpressed to find a Dr Ndemo or such - not Ichung'wa or Nyoro - Ruto sycophants.

You must have missed the EXPERT COMMENT line at the top of the report .

[Nefertiti]

You must have missed the EXPERT COMMENT line at the top of the report .

  the 70% cargo has been happily riding by road - not new cargo. A silly argument for viability.

[MOON Ki]

You must have missed the EXPERT COMMENT line at the top of the report .

  the 70% cargo has been happily riding by road - not new cargo. A silly argument for viability.

I missed part of this.  Perhaps someone would explain it to me: how does one conclude just from the volume ending up in Nairobi that enough money is coming in to pay for the railway?   

(Being "slow", if I had a huge loan to pay, I'd be more interested in actual, real money.   I would not care of enough of it came from just 30%.  And I would be pissed off of 90% was not producing enough returns.)

[RV Pundit]

The point is - SGR if it was ever to be viable - it would be as soon as it hits Nairobi. From there Cargo thins out - we got about 30% that is on transit to Uganda - and 60% ends up Nairobi - with 10%ending everywhere else. This railway-to-or-from port. Obviously when the railway was being built - the cargo at port was around 20M metric tonnes - now it's past 30m - you have 10M new cargo and growing at double digit - so GoK has to race. Kenya economy is growing - so is demand for imports and exports - if in 2030 our economy will be at South Africa level - we are talking 100M plus tonnes of cargo..port of Durban alone handles more than 70M metric tonnes. Our SGR at best can handle 35M....we would need many more SGR - more roads & free way.

The roads will continue to handle 60% of traffic - with SGR targetting 40%.

Where is the problem again?

Magufuli railway to nowhere is the one you should be worried; it build with commercial loan and their 60% of cargo - end right up there in Dar Saleem city

the 70% cargo has been happily riding by road - not new cargo. A silly argument for viability.

[RV Pundit]

No evidence so far the Railway won't pay for itself. There is prepondarance of evidence that in just 1yr of operation - the railway is way ahead of projected cargo and earning. Nobody - not China the creditor or kenya gov - expected the railway to break even before 2025. But this rail already got 11.5B in revenues in first year of operation.

I missed part of this.  Perhaps someone would explain it to me: how does one conclude just from the volume ending up in Nairobi that enough money is coming in to pay for the railway?   

(Being "slow", if I had a huge loan to pay, I'd be more interested in actual, real money.   I would not care of enough of it came from just 30%.  And I would be pissed off of 90% was not producing enough returns.)

[Nefertiti]

The small matter of the Chinese questioning the SGR's viability. A lender like Exim bank obviously has crunched numbers comprehensively to reject a loan for phase 1B.

But I don't mean to just pour cold water on infrasture. It's almost better than doing nothing - since Jubilee chose to binge on hard steele and concrete. A few tweaks - to the haphazard approach - and we might be able to break Kenya free of the yoke of the underdeveloped to an emerging market. Once you hit that milestone - Emerging Market - MNCs start laying strategy for you as a growth area. And not "MEA" or "Sub Sahara". FDI flows in effortlessly at some point.

Israel is a great example of a country that attracts FDI overflow. Principally driven by talent with refined infrastructure. It's the MEA center for many MNCs.

[Nefertiti]

Pundit have you looked into the new education system? does it have IT/computer studies?

[Nefertiti]

Pundit could always show just one CREDIBLE person who vouches for the SGR. You are hardpressed to find a Dr Ndemo or such - not Ichung'wa or Nyoro - Ruto sycophants.

You must have missed the EXPERT COMMENT line at the top of the report .

You nailed it about Mr Orange .. William Ruto is an incompetent guy without the smoke & mirrors.

[RV Pundit]

You actually think FDI can flow when you haven't fixed the basics. The roads, the railways, the electricity. Those are BASIC Infrastructure. The hardware issues come first. The soft issues are easy to deal with.

China obviously is aware that 60% of cargo ends up in Nairobi - and from there the viability of railway is in doubt - unless 1) Uganda commits to use the SGR and or 2) Kenya agrees to put down a collateral.

Exim bank China do not exist to dish out 4B dollars hivyo hivyo.

The small matter of the Chinese questioning the SGR's viability. A lender like Exim bank obviously has crunched numbers comprehensively to reject a loan for phase 1B.

But I don't mean to just pour cold water on infrasture. It's almost better than doing nothing - since Jubilee chose to binge on hard steele and concrete. A few tweaks - to the haphazard approach - and we might be able to break Kenya free of the yoke of the underdeveloped to an emerging market. Once you hit that milestone - Emerging Market - MNCs start laying strategy for you as a growth area. And not "MEA" or "Sub Sahara". FDI flows in effortlessly at some point.

Israel is a great example of a country that attracts FDI overflow. Principally driven by talent with refined infrastructure. It's the MEA center for many MNCs.

[Nefertiti]

Pundit?

Pundit have you looked into the new education system? does it have IT/computer studies?

[Nefertiti]

My critique of Jubilee is not the fact of the infrastructure but the priority, the inefficiency and the manner of execution. Particularly graft. I go farther on the positive and say it's not  that the Principal Ideologue Ruto must be Caesar's wife, but he must not infest the naion's impressionable youth and the hoi polloi with his Rot & Rabies.

We must build but efficiently and economically. Don't destroy the Water Towers but reforest. Build dams - don't steal all the money like Mobutu. Don't kill innocent people... even if your bloody ambitions are in jeopardy, Kenya is bigger and better than you.

You actually think FDI can flow when you haven't fixed the basics. The roads, the railways, the electricity. Those are BASIC Infrastructure. The hardware issues come first. The soft issues are easy to deal with.

China obviously is aware that 60% of cargo ends up in Nairobi - and from there the viability of railway is in doubt - unless 1) Uganda commits to use the SGR and or 2) Kenya agrees to put down a collateral.

Exim bank China do not exist to dish out 4B dollars hivyo hivyo.

[MOON Ki]

My critique of Jubilee is not the fact of the infrastructure but the priority, the inefficiency and the manner of execution.

Exactly.   What seems to be missed all over the place is that nobody is really arguing against the need for better infrastructure.   But at what cost (financially and in terms of priorities and lost opportunities elsewhere)?

Still, the current story from GoK, after Kung Fu again said "piss off", is that actually for the Naivasha to Malaba line they could just and will refurbish the old line; swanky new line not strictly needed.   (The advice they got from the World Bank way back when  was to start by refurbishing the whole Mombasa to Malaba line and only later, when necessary and affordable, work on a new line.)   

Forced by unfavourable financing by the Chinese, the change of mind back to the old line signals a reality check for government officials who spent the last five years fighting back criticism on the cost of the line.

  https://mobile.nation.co.ke/news/Why-China-refused-to-finance-railway-it-had-initially-backed/1950946-5089900-item-1-ld90u0/index.html

But this case  is just a symptom of a general problem that you see everywhere.   Even with basic things such as feeding oneself.  In a country of perpetual mzungu!-saidia!-dought!, one would expect irrigation to be somewhat important.   Well, when I last checked, more money was being spent on the laptops joke than on irrigation for the whole country!

[vooke]

They just discovered viability after they were denied the loan?

It does not matter how much revenues SGR brings, what matters is the profit margin. There are costs and so far the government has been subsidizing operations every month. According to this article which draws from KNBS, we subsidized operations to the tune of 1B

https://www.businessdailyafrica.com/economy/SGR-raked-in-Sh10bn-revenue-in-first-year/3946234-5020294-13c0x1lz/index.html

I believe the subsidy it more than that. KNBS just aggregates data from government agencies so they may have been fed garbage. They told us that Uhuru did over 7500KM new roads in 4 years which is BS

[Kim Jong-Un's Pajama Pants]

You must have missed the EXPERT COMMENT line at the top of the report .

  the 70% cargo has been happily riding by road - not new cargo. A silly argument for viability.

And bad faith too.