The government, through the Office of the Solicitor General, has reportedly begun the process of kicking out a Chinese firm, Africa Star Railways, tasked with managing the Standard Gauge Railway.
According to a report on Sunday, May 24, Solicitor General Kennedy Ogeto wrote to the Kenya Railways Corporation (KRC) to consider terminating the contract over what he termed as irreconcilable differences.
The state accused the firm of declining to review its contract despite the Railway line recording surging losses year after year under what is said to be fraudulent activities by the firm.
The report indicated that the firm in question was overcharging the corporation despite recording declined revenue.
“Further, that KRC may consider terminating the O&M contract after the three-year period stipulated in the O&M contract, in which case KRC may opt to temporarily take over the services of several key experts currently working with the operator,” stated Ogeto.
The report, quoting leaked documents, further intimated that the farm was shrouded in fraudulent activities arising from questionable cancellations of tickets that led to fake refunds.
According to the letter, the contract may be terminated as soon as Saturday, May 30, which marks the SGR’s third anniversary, despite the contract stipulating that African Star was to hold the contract through 2022.
The most affected arm of the SGR is the cargo business which has faced resistance from truck movers with the price of SGR being the most exorbitant.
The rate of transporting cargo from Mombasa to Nairobi costs Ksh3,500 per tonne per kilometer when compared to Ksh2,900 on Metre Gauge Railway and Ksh2,700 by road.
Transporters prefer the Road transporters as the luggage is also likely to be transporters to the cargo owner’s doorstep compared to SGR which takes it to Internal Container Depot (ICD).
The situation was made worse by the Covid-19 pandemic which rendered passenger operations non-existent while significantly reducing the cargo but the state claims that the company still charged KRC for full fees.
In 2017, the SGR made Ksh10 billion losses while in the financial year ending June 30, 2019, the company registered Ksh6.8 billion losses hence costing the taxpayers Ksh18.6 million daily.