The Kenya Railways Corporation (KRC) has commenced a gradual takeover of operations on the standard gauge railway from Africa Star Railway Operation Company.
KRC chairman Omudho Awitta said made the announcement and said that the corporation had already assumed ticketing, security and fuelling functions on the SGR passenger and cargo trains as part of a deal to fully run operations on the Chinese funded and built track by May next year.
“KRC has not terminated its contract with Africa Star Railway Operation Company (AfriStar). We have negotiated so that we take over the running of the standard gauge railway (SGR),” said Mr Awitta.
10 -year contract
KRC in 2017 contracted AfriStar, a subsidiary company of China Road and Bridge Corporation (CRBC), to manage SGR operations and maintenance. Under the contract, the operator has the right to manage the ticketing system and any associated software and hardware. The contract between the two parties was to run for 10 years from 2017 with provision clause for review in the fifth year.
The Kenyan government in 2020, however, reached a deal with AfriStar to take over operations and maintenance by May 2022. The gradual takeover was set to commence in July 2020 with some functions handed over from March 1, 2021.
The SGR operation agreement requires the government to foot a fixed service monthly payment, which is paid quarterly in advance at a rate of US $28.8 million. Apart from the operating fees, Kenya is obligated to honour repayment of the Sh 324 billion it borrowed for the project from the Exim Bank of China in May 2014 and started repaying last year after expiry of the five-year grace period. Parliament last year recommended that the SGR operating costs be cut by half and the terms of the loan taken to finance its construction renegotiated to ease pressure on taxpayers.
