Kenya is planning to secure $4 billion by securitising an import levy to extend its China-built Standard Gauge Railway (SGR) and is in talks with Etihad Rail to manage freight services, according to Transport Secretary Davis Chirchir.
The government intends to use revenue from its railway development levy, a 2% tariff on imports that generates roughly 50 billion shillings ($387 million) annually, to finance the SGR’s extension from Naivasha to Kisumu and Malaba on the Ugandan border, Bloomberg reported.
Completed in 2019 at a cost of $5 billion, the SGR connects the port of Mombasa to Naivasha via Nairobi and is Kenya’s largest infrastructure investment since independence.
Under the planned expansion, Kenya Railways Corporation will continue to handle engineering and maintenance, while private operators will take over service operations.
Don’t Miss This:
Kenya, Uganda Win $2 Billion Railway Dispute in London Court
Kenya’s goal is to expand the network into South Sudan, Ethiopia, and the Democratic Republic of the Congo to boost the commercial viability of freight transport.
Etihad Rail has indicated it needs freight volumes of at least 17 million tons annually to make an investment worthwhile and is considering transporting about 3 million tons of crude oil per year from northern Kenya’s oilfields.
In a separate development, Kenya has revived plans for a $2 billion upgrade of Nairobi’s Jomo Kenyatta International Airport (JKIA) just nine months after scrapping a deal with India’s Adani Group following the indictment of its founder in the United States.
The government is now seeking funding from lenders including China Export-Import Bank, Japan International Cooperation Agency, Germany’s KfW, the European Investment Bank, and the African Development Bank for a new terminal and runway refurbishment.
Construction could begin before the end of the year. With public debt on the rise, Kenya is also turning to alternative financing options.
The country plans to issue a securitised bond worth 175 billion shillings ($1.36 billion) next month for road projects.
Proceeds will be used to repay $530 million in bridge financing already secured from a syndicate that includes TDB, KCB, and Absa.
Half of the bond will be denominated in local currency and the other half in US dollars.
Don’t Miss This:
Kenya’s Biggest Bank to Set Up UAE Office to Tap Growing Gulf-Africa Investment Links
Image Credit: Arabian Gulf Business Insight
