Kenya Railways Corporation is struggling with Sh569.3debt taken 11 years ago to implement the Standard Gauge Railway (SGR).
This has been revealed by a report by the auditor General Nancy Gathungu in her report before the National Assembly Committee on Debt and Privatization shows that Ksh569.3 billion consists of the principal and capitalized interest accrued during the grace period of the loans.
Gathungu revealed that the Philip Mainga led-corporation was not meeting its obligation.
“The audit established that the Kenya Railways Corporation (KRC) was not meeting its loan obligations,” Gathungu stated in her report.
The Project was being implemented in four Phases; Phase 1, Phase 2(a), Phase 2(b) and Phase 2(c) 16 and as at 30 June 30, 2024, only Phase 1 and Phase 2(a) had been implemented.
Review of loan records revealed that the Corporation received three (3) on-lent loans in 2014 and 2015 for the implementation of the Standard Gauge Railway (SGR) Line Project.
The report says that an interview conducted with the KRC Managing Director indicated that the Corporation was not generating sufficient revenue for repayment of its loans.
According to the report, the objective of the project was yet to be fully realized to enable the Project generate sufficient revenue as anticipated in the feasibility studies.
It also revealed that the Corporation had not been receiving all the revenues collected by Kenya Ports Authority (KPA) from the freight charges, for the transportation of cargo through SGR.
KPA was responsible for collecting and remitting SGR freight revenue to an escrow account on behalf of KRC as provided for in the Take or Pay Agreement (TOPA).
Paragraph 6(b) of the TOPA dated September 30, 2014, between KRC and the KPA, the latter was required on behalf of KRC to collect the rates and charges payable for the transportation of goods using the SGR Line in return for an administrative fee to cover administrative costs for collecting and remitting the rates and charges payable to KRC and remit to the Escrow Account on a monthly basis.
But despite the move, the report says that SGR Revenue Collection Reconciliation Reports for a period of 18 months revealed that the cumulative freight revenue collected by KPA for the months of July 2023-December 2024 was Ksh22,620 billion (approximately USD 162 million) Out of this amount, KPA transferred revenue amounting to USD 116 million, approximately Ksh16,212 billion, to the SGR Escrow Account after deducting its monthly administration fees of 0.8 per cent, amounting to USD 940,708, approximately
Ksh130 billion resulting in retained revenue amounting to USD 45 billion, equivalent to Ksh6,277 billion for the said months.
