Introduction

Amidst the information glut that is presented by the digital modes of communication and the political clamor, vital components of Kenya’s infrastructure development can be lost. Nonetheless, they represent history unfolding in our lifetime. The governments of Kenya, Uganda, Rwanda and South Sudan have embarked on railway transport development within the northern corridor. This will be achieved through the construction of the standard gauge railway (SGR) connecting Mombasa to Malaba (with a branch line to Kisumu) onward to Kampala, Kigali (with a branch line to Kasese) and Juba (with a branch line to Pakwach).

The railway line will have a uniform design specification which will permit seamless operation across the borders. The railway development will include upgrading and modernization of the railway training institutes in Nairobi and Tororo to provide local manpower for the construction and operation of the railways.

While the Mombasa to Malaba/Kisumu section is expected to be operational by 2018, the feasibility study and the preliminary design of Malaba to Kampala section is in progress. The government of Uganda and Rwanda are also discussing joint procurement of consultants to undertake the feasibility studies and preliminary designs of the Kampala to Kasese and Bihanga to Kigali sections. Uganda and South Sudan also intend to jointly study the Tororo to Pakwach and Gulu to Juba sections for standard gauge railway installation.

Review of the standard gauge railway project in Kenya
A lot of progress has been made and the ongoing construction and development is set to be over by 2018. Kenya is to develop Mombasa – Malaba/Kisumu sections in two phases.

Phase 1: Mombasa to Nairobi
This phase is in the development stage. The engineering procurement and construction (EPC) contractor identified and the ground breaking and beginning of construction took place on 28 October, 2014.

Phase 2: Nairobi – Malaba/Kisumu
The feasibility study and preliminary designs is in progress for this stage.

A brief introduction to railways

A railway is a permanent track composed of a line of parallel steel rails fixed to sleepers and is for transporting passengers and goods in trains. Railway also refers to any track on which the wheels of a vehicle may run. Railways refer to the entire, infrastructure, equipment, rolling stock, buildings, property, personnel and systems of operation used in railway transport.

Features

Some of the outstanding features of the standard gauge railway on construction which will be developed for freight and passenger traffic include the following:
Each freight train will have a capacity of 216 twenty feet equivalent units (TEUs) and will travel at an average speed of 80 kilometers per hour and they will be operated on the basis of speed, safety and cost effectiveness.

The passenger services will be operated with maximum safety and comfort for passengers at the stations and inside the trains. Each passenger train will have a capacity of 960 passengers and will travel at the average speed of 120 kilometers per hour. To improve the railways, there will be construction of state-of-the-art stations.

The railway has been designed for environmental compatibility particularly within the national parks where fencing will be provided along with under passages for wild animals.

Design standards Mombasa-Nairobi railway
Item                Specification
Gauge              1,435 mm
Design standard     Chinese
Class of railway     Class 1 design, maintenance and operation
Number of tracks     Single initially (civil infrastructure prepared for future doubling)
Length of crossing loops     Minimum 880 meters
Rail     International union of railways (UIC) 60 (60 kg/m)
Switches     Electrically operated
Minimum horizontal curve radius     1,200 meters; difficult sections 800 meters
Minimum vertical curve radius     10,000 meters
Maximum gradient     1.2%
Power type     Diesel initially
Type of locomotives     Passenger:  3,300 HP
Freight: 5,000 HP
Shunting:  2,000 HP
Loading gauge     Double stack containers and future electrification
Axel load     25 tonnes (minimum)

Scope of work

The scope of work is to build a single line standard gauge railway connecting Mombasa to Nairobi with a total track length 609.3 kilometres.

The works will include building freight exchange centres at Mombasa, Voi and Nairobi. Other works include supply and installation of facilities including: water systems, electricity supply, signalling, communication and IT at 33 stations, building and installation of traffic control centre for the whole line at Nairobi, building state-of-the-art passenger stations at Mombasa and Nairobi and five other intermediate stations, supplying locomotives and rolling stock (passenger coaches and freight wagons), building and equipping maintenance workshops for infrastructure, locomotives, rolling stock and facilities and finally be liable for defects for 12 months after the handing over of the various project elements.

Challenges

There are several challenges to be overcome in this venture including; steep incline and ragged terrain mitigated by long viaducts (5 kilometres) from Miritini to Mazeras; deep cuttings and high embankments; a long bridge over Tsavo River; passages for wildlife at Tsavo National Park. There are also the crossing roads and existing railways; these require grade separation. During construction there will be need to observe safety in operations and put up fencing with elephant proof fencing materials throughout in Tsavo National Park.

Land acquisition is a long and tedious process which can cause delays to construction and pose a financial challenge. This is a green field project which will require new stations, depots and facilities like electricity, water supply and equipments. Vitally, it will require locomotives and rolling stock new purchases without which we have no railway.

Operational expectations and other statistics
Item     Expectation
Load per freight train     4,000
Load per passenger train     1,200 passengers
Number of passenger trains     4/day initially
Average speed freight trains     80 km/hour (transit time Mombasa – Nairobi = 8 hours)
Average speed passenger trains     120 km/h (transit time Mombasa – Nairobi = 4 hours 30 minutes)
Line capacity     28 million tones/annum
Infrastructure cost (609.3 km)     USD 3.98 million/km of track
Total cost of turnkey project     KES 327 billion (including civil works, facilities, locomotives and rolling stock)

The end product should be a typical freight train; 880 metres long with 54 double stack flat wagons carrying 216 TEUs. It should be able to cover Mombasa – Kisumu in a transit time less than 18 hours.

Project drivers

The major motivations for the project include: reducing the cost of transportation in the country and the region making Kenya attractive to investment; reducing the freight transportation tariff USD 0.20 per tonne-kilometre on the average to USD 0.083 per tonne-kilometre; and reducing transit time for freight trains from 30 hours on the average to less than 8 hours between Mombasa and Nairobi with increased rail transport share in the northern corridor. This will reduce damage to the roads and make the roads safer. 

Social benefits

There will be direct jobs created including at least 60 new jobs per kilometer of track during the construction period. The local industries will get a stimulus. Large quantities of local inputs such as steel, cement, aggregates, electricity generation and electricity transmission pylons and cables, roofing materials, glass, etc. will be required from local industries with potential to create at least 10,000 jobs. The service and hospitality industry will also get a boost estimated at 3,000 jobs to provide foods, accommodation and leisure.

There will be skills development with an estimated 15,000 people to acquire skills suitable for self employment after the construction period. These are masons, carpenters, mechanics, electricians, etc. Technology will be transferred to Kenyans with an estimated 400 engineers and high technology technicians trained during construction and will be available for local and regional railway development. Accidents will be reduced as the railway will reduce the number of heavy trucks on the road thus reducing accident incidents making the roads safer for human traffic.

Economic benefits

There will be reduced cost of transportation in the region making it an attractive investment destination, and the trains will protect the environment through reduced carbon emission. The better infrastructure will accelerate industrialization through easier and cheaper transport and the establishment of new industries to service the new railway. The railway will contribute to the economy by an annual GDP growth of at least 1.5% during construction and subsequent operation. It will enhance the region’s competitiveness; reduce congestion at the Mombasa Port thereby securing the port as the preferred facility in the region. It will also reduce wear and tear on roads thereby reducing maintenance cost and enhanced freight security.

Steps in the development process
I.    Promise of funding
II.   Feasibility study and preliminary designs by consultant
III.  Kenya railways (KR) and consultant review of feasibility study and preliminary designs
IV.    Preparation of bills of quantities and estimates
V.    Commercial contracts preparations, negotiations and signatures
VI.    Application for financing loan(s) and grants
VII.    Peer review of feasibility study and preliminary design
VIII.    Financing conditions
IX.    Financing agreement(s) negotiations and signatures
X.    Disbursement

Financing

The government of Kenya currently incorporates in the countries annual budgets the railway development fund (RDF) to be serviced by a 1.5 % levy on the cost of all imports. This generates KES. 20 billion annually. The budgets and railways development fund provide seed funds for outsourcing of loans.

The main funding is expected from Loans from EXIM Bank of China under government-to-government arrangement. The government of the People’s Republic of China has a three-year loaning arrangement with Africa under Forum on China – Africa Corporation (FOCAC). In 2012 – 2015, China has set aside USD 20 billion in loans to support the development of certain projects in Africa.

The total cost of the project is USD 3.804 billion. The loan from EXIM Bank is USD 3.233 billion (85 %) while the government of Kenya is to contribute the remaining 15 %.

The loan from the EXIM bank is divided into two parts. The first part is a concessional loan of USD 1.6 billion. It has a 2 % interest per annum with a grace period 7 years. The repayment period is 13 years.

The second part is a commercial loan USD 1.633 billion: ? LIBOR + 360 base point interest per annum. The grace period is 5 years with a repayment period of 10 years. The insurance for the commercial loan is at 6.93%of the value of the loan and paid in three annual installments.

The interest payment during the grace period is to be covered by government of Kenya from budgetary allocations and railways development fund. After this, loan repayment must be covered by revenue from the railways operations. The government of Kenya is to guarantee adequate traffic for railways to generate revenue covering operations and loans/interest payments.

Lenders comfort

EXIM Bank has taken the following measures to ensure the loan will be repaid:

The contractor and construction standard will be Chinese. The railways operator must be familiar to the lender. The loan insurance is also done by SinoSure of China. After construction, the government of Kenya should guarantee traffic for profitable operations.

The escrow account will be opened and operated jointly by EXIM Bank and Kenya Railways with 3 scheduled charges as follows: first charge for operations, second charge for payment of loans and interest and the final charge for capital projects.

The government of Kenya is also expected to guarantee the loan, confirm available funding for land acquisition and relocation. The government of Kenya must also confirm available funding for 15% of its contribution.

Lessons

Through this process several lessons have been learnt. One of the challenges is identifying suitable funding for development. This leads to the realization that government-to-government funding is most promising since this is a capital intensive undertaking and takes some time to pay back. Public Private Partnerships and private funding have certain challenges diminishing their role in financing a green railway development in the East African region.

It is realized that lenders have similar conditions for loans but the conditions for new railways projects are more stringent thus, in new railway development, emphasis should be given to economic and social benefits rather than financial returns.

**Figures and facts obtained from the presentation by SGR project manager ENG. S. OUNA BSC ENG (ELECTRICAL), PE, at the last CIBEX conference at KICC.

 

 

 

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