Transportation: Massive losses loom over new SGR directive

Wednesday, August 7th, 2019 00:00 |
SGR train at Mombasa terminus. Photo/Courtesy

Harrison Kivisu and Reuben Mwambngu

Investments at Container Freight Station (CFSs) worth over Sh60 billion risk going down the drain if government’s move to enforce a directive to transfer all imported cargo to the Inland Container Depot (ICD) through Standard Gauge Railway (SGR) is effected.

The directive which requires all Nairobi and upcountry-bound containers be cleared at the ICD in Nairobi while Mombasa bound cargo is cleared at the port is expected to become effective today. 

National Assembly has  meanwhile ordered Transport Cabinet Secretary James Macharia to appear before legislators  to shed light on the new directive.

Deputy speaker Moses Cheboi told Macharia to appear before the departmental Committee on Transport tomorrow after MPs protested the move,terming it as unacceptable and retrogressive.

Emotive issue

In a communication to the house, Cheboi who also approved an adjournment motion that saw MPs deliberating on the matter, said that the issue was emotive and required the CS to come clean on how the government arrived on that decision.

Also at stake after the new directive is some 7,000 jobs for people employed to work at the 24 registered CFSs in the country.

In a joint public notice issued by Kenya Revenue Authority (KRA) and Kenya Ports Authority (KPA), all imported cargo going to Nairobi and beyond will be moved on the SGR. The notice also states that all local cargo will be cleared at the port and has no mention of CFSs.

“All imported cargo that is not declared and removed from the Port of Mombasa or the ICD-N within 21 days from the date of discharge of the vessel will be transferred to a designated customs controlled area awaiting disposal in accordance to the East African Community Customs Management Act, 2004,” the notice reads in part.

This latest move could starve the facilities with the much-needed business thus leading to their natural death. Transporters and clearing and forwarding firms are also likely to suffer same fate.

 However, KRA and KPA says the move is aimed at improving cargo logistics at the Mombasa port and the ICD. 

A CFS is an extension of the port thus it ordinarily has to operate under customs control and other governmental agencies. 

Container Freight Station Association Executive Director Daniel Nzeki said with more than 85 per cent of bulk cargo being transported by rail, the directive will sink billions of shillings and lead to massive job loss.

Strongly oppose

“We are talking of over Sh60 billion investments and over 7,000 employees that will be affected by this directive, it is a directive we strongly oppose and we are not going to accept that, this is just sabotage because we have been paying taxes upfront to KRA,” he said.

Nzeki termed the move as “uncalled for” since players in the sector have not been consulted and there has been no business friction.

Different stakeholders in the industry have protested against the government’s move on SGR, saying it will  lead to a huge increase in transport costs.

They say, for instance, that while it costs Sh50,000 to move a 20-foot container from Mombasa to Nairobi, the costs associated with the handling and storage of cargo at the port pushes the amount to Sh142,000. Transporting an equal load by road costs only Sh65,000. Additional report Mercy Mwai

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