Monopoly will not solve SGR problem

Monopoly will not make SGR profitable on Nairobi route alone

In Summary

• SGR monopoly of all Mombasa-Nairobi cargo starts on Thursday

• Cost of a container on SGR is already more expensive than using a truck


From Thursday all cargo from Mombasa will come to Nairobi on the SGR railway. Government is creating a monopoly.

Trucks will be blocked from transporting containers on the Mombasa highway unless they are carrying cargo to the immediate vicinity of Mombasa.

In the last year, SGR freight prices have doubled and it now costs $725 to bring a 20 foot container to Nairobi and $980 for a 40 foot container.

This is around 10 per cent more expensive than using a truck. To make matters worse, a truck has to transport the SGR containers from the Inland Container Depot at Embakasi to their final destination, adding around another $350 to the freight cost. 

Government's problem is that the SGR has to repay its $3.6 billion loans. But the SGR will only become truly profitable when it reaches Kampala, and hopefully Kigali. It cannot be profitable just carrying freight to Nairobi.

This monopoly will just force prices up and make Kenyan industries uncompetitive. If necessary, place an extra tax on trucks using the Mombasa highway but don't create a monopoly. It will not solve the SGR problem.

Quote of the day"There is nothing politically right that is morally wrong."

Daniel O'Connell
The Irish activist was born on August 6, 1775

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