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For bulky products to and from the Port of Mombasa to the mainland Kenya and the great lake region and thus makes a major contribution to the development of the economies of the Region. It is in recognition of the this role that a division has been set up in the Ministry to address rail matters.
The Railways Division in the Ministry of Transport is therefore responsible for the Railways Sub-sector and has set out a vision for the Sub-sector as to:
Provide world class rail transportation systems and services with a mission to facilitate efficient rail transportation services to spur socio- economic growth and development 1.Responsibilities of the Railways Division for the Railway Sub-sector:
a)Policy Formulation
To develop, review and oversee enforcement of policies in the rail transport.
b) Development of Regulatory Framework
The Division ensures development of regulatory framework regarding provision of rail services in the country.
c) Service Delivery Oversight
Railways Division oversees service delivery by Kenya Railways Corporation through enforcement of enabling Acts, Policy direction and performance monitoring and evaluation.
2.Policy Priorities for the Railway Sub-sector
a) Promote the growth and development of rail services in the country
b) Rail Transport Services improved
c) Encourage Private and Public Sector Participation and Collaboration to expand rail network.
3.Strategic objectives for the Railway Sub-sector
a) Increase passenger and freight traffic flow on rail network.
b) Promote private investment in the rail sub-sector.
4.Current Developments In The Railway Sub-sector
a) Concessioning of Kenya railway
At its good days in the early eighties, KRC was carrying more than double its current volume of freight traffic of about 1.6 million tones. But because of the declining traffic, KRC reduced its staff by more than 50% over the last 10 years. However, continued overstaffing couple with breakdown in systems and procedures and declining capital investment led to unnecessarily high operating costs, losses, negative cash flow and inability to sustain operations.
A strategic decision was taken in 2003 to have joint concessioning of Kenya and Uganda Railways. The Governments of Kenya and Uganda however, decided to concession their two railways jointly. A Memorandum of Understanding and a general blueprint for the design of the Joint Concession was signed July 8, 2004. The joint concession was awarded through a competitive bidding process governed by the laws of Kenya and Uganda in 2005. The two Governments selected the Rift Valley Railways Consortium (RVRC) led by Sheltam of South Africa on October 14, 2005. The handling over though delayed for good reasons was done on 1st November 2006. The concessioning of railways is expected to stem the deterioration in their operating and financial performance under state management and to reduce the periodic large injections of state funds.
Under a 25 year Concession Agreement, the railway assets including all the infrastructure, locomotives, rolling stock, plant and maintenance equipment, some facilities together with selected property assets, will be conceded to the concession company at the commencement of the concession. The concession company will have the obligation to make minimum investments in the railway network of US$ 5 million for the first 5 years, and to operate and maintain the network, locomotives, and rolling stock. The concession company is expected to invest around US$390 million in the upgrading of track infrastructure and rolling stock over the life of the concession. The investment requirements will be driven by the need to enhance capacity for the projected level of freight traffic and achieving the technical standards specified in the Concession Agreement, which specifies, amongst others, an increase in freight volumes by at least 75% by year five and then by at least 60% of the GDP increase every year. In return for the Grant of the concession rights, the concession company will pay a one off entry fee of US$ 3 million. It will also pay annual concession fees to KRC computed as a percentage (11.1%) of freight revenues and US$1 million per annum for each of the 5 years of the passenger service concession. KRC will be the conceding authority and will be responsible for monitoring the Concession, and ensure that the concession company complies with operating standards and safety regulations specified in the Concession Agreement.
As part of the improvement of the railway services, the Government secured a loan from the World Bank through the East Africa Trade and Transport Facilitation Project to finance (i) the retrenchment of excess employees not taken over by the concessionaire in order to ensure payment of the handsome retrenchment package on time and as well provide training to the retrenched staff as way of making them comfortably adapt to the business world: (ii) building, as mitigation measures, of houses and three markets over a period of three years to resettle the families which have encroached upon the railway line as away of cushion them from disruption of life– a tarmacked footpath will also be constructed to provide access to the main road; and (iii) setting up of pension fund and trustee to ensure employees retiring are paid their dues on time. The whole Programme is funded to tune of Kshs. 5.2 billion.
The concessioning of the railways will lead to a more modern and efficient management of the railway sector and consequently to improved quality of service, reduced tariffs, and increased market shares for the railways in freight traffic. This will ultimately increase efficiency and reduce cost of transporting goods and persons by rail through increased investment in the sector and further reduce cost of road maintenance due to decrease in road damage as cargo is shifted back from the road to rail.
b) Development of a New Railway Line Under ROOLA Project
In recognition of the need to build infrastructure that will provide the backbone to the growth of a vibrant economy and provide invest opportunities as well as create millions of jobs for the jobless youth, the Government is in the process of bringing on board an investor that will development a new transport corridor from Lamu to Southern Sudan, Ethiopia and later on Somalia under the ROOLA Project at a cost of US$ 15 billion. The New Transport Corridor will comprise of a New Port , Air Port and Recreational City at Lamu; new road network; a new railway line; and an oil refinery and oil pipe line, in addition to development of several recreation cities along the new transport corridor. The Project will definitely change the economy of the country as most Kenyans will be fully involved in new economic activities.
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