THE SGR QUESTIONS…
The question with SGR is not whether it’s fancy or not. That it’s fancy is a given. However Range Rovers are fancy cars as well, it doesn’t mean you put your family into debt for the rest of their lives trying to buy one. Going by that logic, Kenya should start a space program as well. The key questions are
1. Was that the best use of Kshs 500Billion (inclusive of interest)?
2. Could you have achieved the same objective for less? There were four alternatives – do nothing, refurbishing, old wayleaves and new track, new wayleaves and new track, new parallel development. (All the other alternatives achieved the same objective and cost less)
3. Viability? This means do the internal revenues pay for the project?
4. If they do, why then do you have a “Take or Pay” contract with KPA? This means that if they don’t get the goods threshold required, KPA has to pay the Chinese out of budget.
4. If the national government took the loan, why is KPA guaranteeing a National Government loan? (Look up the law on SAGAs)
5. Wasn’t a sovereign guarantee issued for the project? Why a “Take or Pay” contract again.
6. Why isn’t Kenya Railways administering it? Bewildering
7. If Kenya Railways couldn’t manage the current lines, by what brilliance will they manage a railway profitably all of a sudden?
8. If the project has a take or pay contract, why do we need the RDL, the concurrent railway development levy of 1.5% being charged on goods? Yet another project financial guarantee
9. If the project has a “take or pay” contract with KPA, why issue a Sovereign guarantee? Do the number of inbuilt guarantees say something about project viability?
10. By what method will you compel the goods from road onto rail? Legislatively it’s “dead on arrival”. Constitutionally, it’s a “freedom” question.
11. How do you determine which goods are destined for where? Which ones get off at Mombasa and which ones in Nairobi?
12. By road it costs about ksh 70,000 per 40ft container, but the SGR plans to charge ksh 120,000. Can the government “compel” its citizens on to a more expensive public service.
13. If you then put a punitive tax for Goods on roads, for example a Levy at weighbridges? Does this amount to not double but triple taxation?
14. The way the loan was structured into 5 and 10 years. $1.5B and $1.5B. Was this the best deal out there? IBRD has 30 year concessional facilities that have 5 year grace periods etc.
15. If the deal was 90% Chinese Financing (EXIM Bank) and 10% local (through RDL). Shouldn’t the Railway Development Levy then have an extinction date when local portion of financing is met?
16. What happens to the RVR concession? If all goods to go by rail are compelled onto the SGR? Does it mean we completely discard an existing railway network?
17. How long before merchants go to court to seek orders barring them being compelled to put their goods on the train at a more costly price for them? Probably a month at most
18. If goods are meant to subsidise passenger traffic, what happens yet the goods themselves are subject to a questionable destiny/fate above? Do passenger rates then go up?
19. And in the event that a court case happens, where the government cannot guarantee the goods in the contract and is compelled to then put a competitive rate, what happens to their “take or pay” contract with Chinese Exim bank? How do they fulfil it? Do they then pay “Out of Budget”?
20. Theoretically, by then the government will have had the Railway Development Levy 1.5% RDL, it will have invested in rehabilitating an ICD in Nairobi, also invested in a Dry Port in Naivasha, and invested in an SEZ in Naivasha, it will completely Killed an existing Railway, put a railway subsidy out of budget to cover costs, it will have KPA paying direct money every time there’s a goods threshold shortfall and finally it will have killed clearing and forwarding, trucking and port related business in Mombasa … all this just to guarantee a single project. Is it worth it? Uamuzi ni wako