Highlights

Kenya to take over Chinese-operated rail line five years early

Kenya has announced that it is ending its contract with China Road and Bridge Corporation (CRBC) to run the Mombasa to Nairobi standard gauge railway.

The 480km line is run by CRBC’s Africa Star Railway Operation Company for the operation of the Standard Gauge Railway, but will be taken over by the Kenya Railways Corporation (KRC) in May next year.

According to Omudho Awitta, chairman of KRC, security, ticketing and fueling services have already been transferred.

He told newspaper The South China Morning Post: “We have negotiated with the contractor so that we take over the running of the Standard Gauge Railway.”

KRC’s contract with CRBC said the Chinese company would run the service for 10 years after it opened, but included an option to review the arrangement after five years.

Kenya had become increasingly unhappy with the running cost of the line, and last summer KRC said it owed Africa Star more than $340m in operation and maintenance fees.

The line made a revenue of $126m for 2019, compared with $57m reported in 2018. That is less than the operating cost, currently estimated to be $170m.

A parliamentary report released in September recommended a programme of reforms to reduce losses on the line, including the immediate renegotiation of operating costs (see further reading).

The move is expected to save more than $120m a year in fees.

Global Construction Review

~WakenyaCanada

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