Government Drags Feet On Privatisation of Kenya Railways

By Tervil Okoko, Panafrican News Agency (Dakar), 27 March 2001

Nairobi, Kenya - Two years after the process was due completion, the government of Kenya is still to break any ground privatising Kenya Railways Corporation (KR).

The corporation was due to have been parcelled over to the private sector by December 1999, but observers note that the government was yet to make up its mind over the exact mode of its sale.

After the collapse of the original East African Community in 1977, the Kenya Railways Corporation Act established KR as the major rail and inland water transport firm to supplement the services of the Kenya Ports Authority.

KR's importance to Uganda, Rwanda, Burundi, southern Sudan and eastern Democratic Republic of Kenya cannot be over-emphasised. But political management appointments, resulting in gross inefficiency and corruption, have seen its fortunes dwindle with every passing year.

The corporation's case is typical of the government's dilemma over the approach it wishes to take in minimising its role in the parastatals.

For over two decades now, KR has had its share of problems, not least of which is the non-standardisation of its locomotives and tracks, the consequence of which has been a high cost of fleet maintenance.

Besides, the corporation has been a constant cash drain to the government Treasury.

According to records at the headquarters in downtown Nairobi, during the 1995/1996 fiscal year, for instance, it recorded a loss of about 7 million US dollars.

And this despite registering a rise in revenue from about 18 million to about 69 million dollars during the period between the 1988/1989 and the 1995/1996 fiscal years.

Industry observers argue that although the total annual revenue between 1991 and 1995 rose sharply, its continued woes had more to do with tariff hikes above the level of annual inflation rates than its operations.

The sordid state of affairs has been compounded by low locomotive availability, especially for the main Mombasa-Nairobi- Kisumu line.

The availability declined from 52 per cent in 1991 to only 47 per cent in 1994.

The Kenya Institute of Economic Affairs (IEA) ascribes the situation to the dilapidated state of the locomotives and other equipment, to say nothing about the tracks themselves. Quite a few of the locomotives, bought in Germany, the US and Britain, and the lines, which were built at the turn of the century, are old and expensive to maintain.

IEA contends that although the workshops can adequately serve the whole of the East African railways, their operation and management are not good enough to serve KR alone.

It is estimated that 75 per cent of the telecommunications and signalling kit is obsolete and crying for replacement and modernisation. Right now there are at least a derailment per week owing to the poor condition of the tracks. Apart from their age, several defects attributable to neglect and insufficient maintenance are the cause of this sad accident frequency.

According to recent KR reports, the corporation is over-established.

KR cut down on its staff from about 20,000 in 1991 to about 16,000 in 1996. The retrenchment has continued and the staff now stands at about 14,000-strong.

But the reports argue that even this is too high for the cash-strapped company, which requires the optimum establishment of only 60 per cent of this size.

Over 80 per cent of the KR revenue accrues from its freight services, while those of passengers account for only 8 per cent.

And owing to the stiff competition from air, road and water transport, the passenger services have been running at a loss for a long time.

The passenger services, especially the commuter segment, are likely to gain the most from privatisation.

The most crucial areas that the buyer will give priority is the general infrastructure, which includes the permanent tracks, telecommunications, the stations, the harbours and the piers and quays, the depots, the sheds and the rolling stock.

The inland water transport on Lake Victoria, which serves also Uganda, Tanzania and the Great Lakes, and the catering services are also crying for attention.

Perhaps it is all this and the thorny issue of unpaid retrenchees' benefits, running into scores of millions of dollars that makes the government drag its feet over the KR sale.