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SGR passenger traffic falls for first time since Covid pandemic
A standard gauge railway steward attends to a customer at the SGR Nairobi Terminus Syokimau on August 14, 2024. Kenya Railways has so far assumed 98 percent of the SGR operations with the rest expected to be concluded by December this year.
The number of passengers using the standard gauge railway (SGR) dropped last year— the first such dip since the Covid-19 pandemic— even as higher fares averted a hit on the revenues.
Data from the Kenya Railways Corporation (KRC) shows that 2.44 million passengers used the SGR trains last year, down 10 percent from 2.72 million in 2023 as passengers reacted to an increase in ticket prices of up to Sh1,500 from the start of last year.
But the doubling of fares drove revenues to Sh4.09 billion last year, a 39 percent surge from the Sh2.93 billion made in 2023.
The other year in which SGR recorded a dip in passenger numbers was in 2020, when travel restrictions imposed to curb the spread of the coronavirus hit the SGR along with other transport sectors.
KRC increased fares by 50 percent, with the first class tickets from Nairobi to Mombasa rising from Sh3,000 to Sh4,500 and economy class rose from Sh1,000 to Sh1,500 since January last year.
The higher fares, which KRC attributed to surging costs of fuel, were implemented on the inter-county and express trains from Nairobi to Mombasa.
SGR started passenger services in 2017 and has been posting year-on-year growth in ticket sales, except in 2020 when Covid-19-induced disruptions halted the rise.
The slow growth in train revenue has hampered SGR’s ability to self-fund its operations and pay off the multi-billion-dollar loan tapped from China in 2014 and 2015 to fund the construction of the railway and purchase of the wagons.
In 2021, for example, the government illegally diverted Sh18.1 billion from the Petroleum Development Levy coffers to pay Africa Star Railway Operation Company Ltd (Afristar)— the Chinese firm that has been operating SGR since its inception.
However, last year’s rise in revenues from the SGR was offset by a four percent fall in revenues from the cargo trains, further hurting any prospects of the SGR breaking even any time soon.
The KRC data shows that SGR made Sh13.97 billion from the cargo businesses last year, compared to Sh14.68 billion made in 2023 as tonnage fell marginally to 6.53 million tonnes last year from 6.533 million tonnes.
The freight business, which has for years been SGR’s major revenue stream, is now facing stiff competition after the government revoked an earlier directive in 2022 that had made it compulsory for all cargo from the port of Mombasa to be ferried via the trains.
The mandatory use of the SGR cargo trains was enforced in 2019 as the government sought to race and collect high revenues from the trains to help it break even, and later begin to partially repay the Chinese loans used to fund the SGR project.
Kenya borrowed $5.08 billion (Sh657.19 billion at current exchange rates) to fund the SGR railway, which runs from Mombasa to Naivasha. The repayment started in 2020 after a five-year grace period and is made in January and July each year.
