October 16, 2019 / 8:52 AM / a month ago

Kenya opens Chinese-built railway linking Rift Valley town to Nairobi

NAIROBI, Oct 16 (Reuters) - Kenya’s President Uhuru Kenyatta is due to open a new $1.5 billion Chinese rail line on Wednesday linking the capital Nairobi to the Rift Valley town of Naivasha, despite delays in establishing an industrial park there to drive freight traffic.

The extension links to the $3.2 billion line between the port of Mombasa and Nairobi that opened in 2017, also suffering from underutilisation of its cargo services. Both sections were Chinese-funded and Chinese-built.

The development of Kenya’s railways has been part of China’s “One Belt, One Road” initiative, a multi-billion dollar series of infrastructure projects upgrading land and maritime trade routes between China and Europe, Asia and Africa.

Kenya had planned to open an industrial park in Naivasha, offering companies tax breaks for investing in manufacturing, and preferential tariffs for electricity generated in the nearby geothermal fields. But that has been delayed.

Kenyatta was re-elected for a five-year term in 2017 after promising to develop the East African nation’s infrastructure. The railway was his pet project but it has been dogged by problems. In April, China refused to fund the planned $3.7 billion extension from Nairobi to the Ugandan border town of Malaba.

Transport Minister James Macharia said then that the government would spend $210 million to rehabilitate the colonial-era Malaba line instead.

Many importers say the new Mombasa to Nairobi railway is too expensive to move freight. They have been angered by government attempts to force them to use it.

It costs about $800 to truck a container from Mombasa to Nairobi, but $1,100 by rail, mainly due to extra costs for moving goods from the rail terminus to an inland depot.

Government borrowing has been ramped up to fund the railway and other projects such as roads. Total public debt stands at about 55% of GDP, up from 42% when Kenyatta took power in 2013.

Last week, parliament raised the government’s debt ceiling to 9 trillion shillings ($86.87 billion) after the government came close to hitting the earlier ceiling of 6 trillion shillings. ($1 = 103.6000 Kenyan shillings) (Reporting by Duncan Miriri Editing by Katharine Houreld and Louise Heavens)

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