Cost comparison SGR Kenya vs SGR Tanzania
Cost comparison SGR Kenya vs SGR Tanzania
- Thread starter Geza Ulole
- Start date
Kaka umemalizaaaaaa.....
Geza Ulole
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Tanzania's plan for SRG rail covers over 2000 km n Dar to Mwanza alone is over 900km! Stop being desperate as Kenyans!
Edward Wanjala
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Desperate of what?
Geza Ulole
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Desperation on tainting Tanzanian's good image by linking ur corruption scandals to Tanzania's good moves
Geza Ulole
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Mota Engil bags Tanzanian railway construction contract
Posted February 5, 2017 by Aviation, Tourism and Conservation news - DAILY from Eastern Africa and the Indian Ocean islands in [URL='https://wolfganghthome.wordpress.com/category/uncategorized/']Uncategorized. Leave a Comment
FIRST BUGESERA AND NOW TANZANIA’S SGR CONSTRUCTION AS MOTA ENGIL SPREADS ITS WINGS
(Posted 05th February 2017)
image29
image30
Regular sources in Dar es Salaam have confirmed that the Tanzanian government has wasted no time following the visit of Turkish President Erdogan two weeks ago.
It is understood that a Turkish company, Yapi Merkezi, has emerged as the top contender to help construct some 300 kilometres of the new SGR, short for Standard Gauge Railway along Tanzania’s central transport corridor.
The company signed relevant contracts with the Railway Assets Holding Company on Friday, alongside Portuguese company Mota Engil, which rose to sudden prominence outside Portuguese speaking countries in Africa last year when it signed a major deal with the Rwandan government to construct and manage under a concession agreement, the new international airport in Bugesera outside Kigali.
The deals are worth some 2.7 trillion Tanzania Shillings and cover a portion of the line which will eventually be 1.300 kilometres long, linking the port of Dar es Salaam with hinterland countries like Rwanda and Burundi and possibly extend as far as Eastern Congo.
Construction, due to start within two months, is estimated to take some 2 1/2 years to complete but other sections too need to be constructed at the same time to make the entire line operational.
It could not be established to what extend Turkey will step up in co-financing the project as the sources claim Tanzania at present will only be able to inject 1 trillion Tanzania Shillings into the project, needed additional financial resources to complete the project in time.
It is expected that contracts for other sections of the new central SGR line will be awarded over the coming weeks to fast track the project and bring the railway connection to Rwanda in on time, ahead of the Mombasa – Nairobi – Naivasha – Malaba – Kampala line.
Mota Engil bags Tanzanian railway construction contract[/URL]https://www.jamiiforums.com/member.php?u=18171
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Mekatilili
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Brag about a project that hasn't even broken ground while the Kenyan project is nearing completion.
YoungD
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heheheheheh how he forgets quickly, if we go back to his threads, we will definitely find his previous threads bragging about the deal with the Chinese which never was. The fact remains that
TANZANIA DOES NOT HAVE AN SGR!
Emc2
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But the truth is kenya has the version 1920 railway in the name of SGR.
YoungD
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in ur dreams.
Geza Ulole
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Infrastructure
Tanzania to build a 2,561 km railway network in 30 months
By The Exchange
Posted on February 6, 2017
She also commended the fifth phase government for bringing development to its people.
Comments
Tanzania struck a multibillion deal with a consortium of Turkish and Portuguese companies so build a standard gauge railway line. The deal believed to be worth $1.215 billion was signed between the East African country and the companies, as part of the plan to bolster trade with its land-locked neighbours. The deal, signed on Friday, aims at building the railway line between Dar es Salaam and Morogoro. It was penned down on Friday.
The railway line to be constructed will cover a distance of 300-kilometre. In total, Tanzania wants to build a 2,561 km standard gauge railway network connecting its main Indian Ocean port of Dar es Salaam to eastern and southern Africa’s hinterland.
The port’s vast hinterland loops in eastern Democratic Republic of the Congo, Zambia, Rwanda, Burundi, and Uganda.
In a statement, state-run railway firm, Reli Assets Holding Company Ltd (RAHCO), said it had signed an agreement with a joint venture of Turkish firm Yapi Merkezi and Portugal’s Mota-Engil Engenharia e Construção África, S.A.
The firm said construction of the railway line would start next month and take 30 months to be completed.
It did not give details on how the infrastructure project would be financed but last July Tanzania said it had secured a $7.6 billion loan from China’s Export Import Bank (Exim) to build part of the new railway network.
Speaking during the signing ceremony in Dar es Salaam, Minister for Works, Transport and Communication, Prof Makame Mbarawa said Dar-Moro phase is part of five phases planned to be implemented to complete the SGR to Mwanza. The SGR project is the biggest infrastructure in Tanzania to be implemented. It will be completed in 30 months.
He added: “We are determined to improve transport services our country by using modern infrastructure, thus why the government has decided to construct the standard gauge railway with high speed compared to others in Africa.
He added that the construction of the railway line will act as a catalyst for social and economic development in the country. The minister, however, insisted that the cost for the construction of railway line will not be the same in other regions due to geographical differences.
Prof Mbarawa promised to increase the budget for the construction of the railway line in the next financial year, adding that the government will also continue to seek soft loans for completing the project.
He, however, called upon transport stakeholders to turn up in large numbers to apply for tenders announced recently for the construction of another phase of the railway line from Morogoro – Makutupora 336 km, Makutupora – Tabora 294 km, Tabora- Isaka 133km and Isaka to Mwanza 248km which will be open in April, this year.
For his part, RAHCO Managing Director, Mr Masanja Kadogosa, said that the construction of the railway line will take thirty months which will include the construction of power infrastructure, six railway stations for passengers and six for overtaking and construction of a 102 kilometres fence.
Turkish Ambassador to Tanzania, Ms Yassemin Eralp, assured continued cooperation with the government in implementing the project. She also commended the fifth phase government for bringing development to its people.
Related Items:Export-Import Bank (Exim), Featured, Mota-Engil Engenharia e Constru ção África, Reli Assets Holding Company Ltd (RAHCO), Yapi Merkezi
Tanzania to build a 2,561 km railway network in 30 months – The Exchange
Tanzania to build a 2,561 km railway network in 30 months
By The Exchange
Posted on February 6, 2017
She also commended the fifth phase government for bringing development to its people.
Comments
Tanzania struck a multibillion deal with a consortium of Turkish and Portuguese companies so build a standard gauge railway line. The deal believed to be worth $1.215 billion was signed between the East African country and the companies, as part of the plan to bolster trade with its land-locked neighbours. The deal, signed on Friday, aims at building the railway line between Dar es Salaam and Morogoro. It was penned down on Friday.
The railway line to be constructed will cover a distance of 300-kilometre. In total, Tanzania wants to build a 2,561 km standard gauge railway network connecting its main Indian Ocean port of Dar es Salaam to eastern and southern Africa’s hinterland.
The port’s vast hinterland loops in eastern Democratic Republic of the Congo, Zambia, Rwanda, Burundi, and Uganda.
In a statement, state-run railway firm, Reli Assets Holding Company Ltd (RAHCO), said it had signed an agreement with a joint venture of Turkish firm Yapi Merkezi and Portugal’s Mota-Engil Engenharia e Construção África, S.A.
The firm said construction of the railway line would start next month and take 30 months to be completed.
It did not give details on how the infrastructure project would be financed but last July Tanzania said it had secured a $7.6 billion loan from China’s Export Import Bank (Exim) to build part of the new railway network.
Speaking during the signing ceremony in Dar es Salaam, Minister for Works, Transport and Communication, Prof Makame Mbarawa said Dar-Moro phase is part of five phases planned to be implemented to complete the SGR to Mwanza. The SGR project is the biggest infrastructure in Tanzania to be implemented. It will be completed in 30 months.
He added: “We are determined to improve transport services our country by using modern infrastructure, thus why the government has decided to construct the standard gauge railway with high speed compared to others in Africa.
He added that the construction of the railway line will act as a catalyst for social and economic development in the country. The minister, however, insisted that the cost for the construction of railway line will not be the same in other regions due to geographical differences.
Prof Mbarawa promised to increase the budget for the construction of the railway line in the next financial year, adding that the government will also continue to seek soft loans for completing the project.
He, however, called upon transport stakeholders to turn up in large numbers to apply for tenders announced recently for the construction of another phase of the railway line from Morogoro – Makutupora 336 km, Makutupora – Tabora 294 km, Tabora- Isaka 133km and Isaka to Mwanza 248km which will be open in April, this year.
For his part, RAHCO Managing Director, Mr Masanja Kadogosa, said that the construction of the railway line will take thirty months which will include the construction of power infrastructure, six railway stations for passengers and six for overtaking and construction of a 102 kilometres fence.
Turkish Ambassador to Tanzania, Ms Yassemin Eralp, assured continued cooperation with the government in implementing the project. She also commended the fifth phase government for bringing development to its people.
Related Items:Export-Import Bank (Exim), Featured, Mota-Engil Engenharia e Constru ção África, Reli Assets Holding Company Ltd (RAHCO), Yapi Merkezi
Tanzania to build a 2,561 km railway network in 30 months – The Exchange
Edward Wanjala
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Wee!! I had never seen wooden sleepers, i never thought they do exist. Are they for Tazara??
bongo-live
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A little comparison.
Tanzanias new rail.
Tanzania has signed a deal to build a 200km railway between Dar es Salaam and Morogoro for US$1.2 billion (Sh124.3 billion). It has also been reported that the same consortium will build the first 400km phase of the new central line connecting Dar es Salaam to Rwanda and Burundi known as the DIKKM line.
The combined projects work out to 600km of rail for US$2.3 billion (Sh238.2 billion), less than half (43 per cent) of the cost of our standard gauge railway from Mombasa to Naivasha, which is about the same distance. However, the Dar-Morogoro line is more expensive as it is an electrified commuter rail with many stations, and built for a top speed of 160km per hour. The cost of the long haul DIKKM line works out to US$2.75 million (Sh284 million) per km, which is on the lower end of the global range of US$2.5 - 4 per km. At US$8 million (Sh828.6 million) per km, ours is way way out. Ethiopia’s electrified one cost US$4.6 million (Sh476.4 million) per km. At the Tanzania’s DIKKM line, the Mombasa-Nairobi line should have cost us US$1.5 billion (Sh155.4 billion), not US$4 billion (Sh414.3 billion).
CHINESE DEAL
Tanzania had signed a US$7.6 billion (Sh787.1 billion) Chinese deal to build the 2200 km DIKKM project. This still works out to a realistic US$3.45 million (Sh357.3 million) per km, but President John Magufuli thought it too expensive and went shopping. If the whole project is built at the quoted costs, it will cost US$6 billion (Sh621.4 billion) saving Tanzania US$1.5 billion (Sh155.4 billion). It is also noteworthy that the Dar es Salaam—Morogoro was tendered in September last year with a December deadline, the contract was awarded this month, and the project is to start in March. That is record time for a project of this magnitude. A year ago, this column opined that “whether by design or happenstance, Magufuli’s crusade is signalling zero corruption tolerance (and) investors can come to Tanzania with the confidence that when they encounter corruption and bureaucratic obstacles, the man at the helm can be relied on to deal with it”. It is paying off in spades.
For many Kenyans, the scale of the SGR scam did not hit home until the trains arrived. Seemingly, many people actually believed they would be whizzing across the country in the state of the art bullet trains depicted in Jubilee’s campaign images. Until they saw the vintage hand-me-down locomotives rolling off the ship, they would not let the facts that this was primarily an 80kph diesel locomotive freight railway get in the way of their imagination. The bubble now well and truly bust, it is worth revisiting the case against the SGR. My case against the SGR is built on three grounds.
BUSINESS ONE
First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking. This has not changed. We’ve seen the government decide to truck crude oil from Turkana to Mombasa, even though the “early oil” transportation proposal was made to them by Rift Valley Railways.
Second, the SGR is not a significant improvement in either capacity or cost. To start with, railway freight does not need to move quickly. Improving speed from 60kph to 80kph is inconsequential.
Third, it is not financially viable. There is no competitive tariff that a railway that has cost US$4b from Mombasa to Nairobi can charge to pay for itself. Using the trucking tariff of US$.085 per km/tonne, the debt service alone works out to equivalent of 7.5 million tonnes of freight per year, which roughly means that it would have to carry at least three times that, 22.5 million a year, to break even.
It has been my contention from the outset that Lamu port Southern Sudan Ethiopia Transport corridor could have been the priority for a new railway line, but even then, the railway should have run from Lamu to Thika and onwards to Nanyuki, as opposed to the northern route.
This is not to reinforce the marginalisation of northern Kenya—what northern Kenya needs is infrastructure connecting it to southern Kenya, not infrastructure passing through it going elsewhere. But as economics Nobel Laureate and New York Times columnist Paul Krugman once quipped, bad ideas are like cockroaches. No matter how often you flush them down the toilet, they keep coming back.
Tanzanias new rail.
Tanzania has signed a deal to build a 200km railway between Dar es Salaam and Morogoro for US$1.2 billion (Sh124.3 billion). It has also been reported that the same consortium will build the first 400km phase of the new central line connecting Dar es Salaam to Rwanda and Burundi known as the DIKKM line.
The combined projects work out to 600km of rail for US$2.3 billion (Sh238.2 billion), less than half (43 per cent) of the cost of our standard gauge railway from Mombasa to Naivasha, which is about the same distance. However, the Dar-Morogoro line is more expensive as it is an electrified commuter rail with many stations, and built for a top speed of 160km per hour. The cost of the long haul DIKKM line works out to US$2.75 million (Sh284 million) per km, which is on the lower end of the global range of US$2.5 - 4 per km. At US$8 million (Sh828.6 million) per km, ours is way way out. Ethiopia’s electrified one cost US$4.6 million (Sh476.4 million) per km. At the Tanzania’s DIKKM line, the Mombasa-Nairobi line should have cost us US$1.5 billion (Sh155.4 billion), not US$4 billion (Sh414.3 billion).
CHINESE DEAL
Tanzania had signed a US$7.6 billion (Sh787.1 billion) Chinese deal to build the 2200 km DIKKM project. This still works out to a realistic US$3.45 million (Sh357.3 million) per km, but President John Magufuli thought it too expensive and went shopping. If the whole project is built at the quoted costs, it will cost US$6 billion (Sh621.4 billion) saving Tanzania US$1.5 billion (Sh155.4 billion). It is also noteworthy that the Dar es Salaam—Morogoro was tendered in September last year with a December deadline, the contract was awarded this month, and the project is to start in March. That is record time for a project of this magnitude. A year ago, this column opined that “whether by design or happenstance, Magufuli’s crusade is signalling zero corruption tolerance (and) investors can come to Tanzania with the confidence that when they encounter corruption and bureaucratic obstacles, the man at the helm can be relied on to deal with it”. It is paying off in spades.
For many Kenyans, the scale of the SGR scam did not hit home until the trains arrived. Seemingly, many people actually believed they would be whizzing across the country in the state of the art bullet trains depicted in Jubilee’s campaign images. Until they saw the vintage hand-me-down locomotives rolling off the ship, they would not let the facts that this was primarily an 80kph diesel locomotive freight railway get in the way of their imagination. The bubble now well and truly bust, it is worth revisiting the case against the SGR. My case against the SGR is built on three grounds.
BUSINESS ONE
First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking. This has not changed. We’ve seen the government decide to truck crude oil from Turkana to Mombasa, even though the “early oil” transportation proposal was made to them by Rift Valley Railways.
Second, the SGR is not a significant improvement in either capacity or cost. To start with, railway freight does not need to move quickly. Improving speed from 60kph to 80kph is inconsequential.
Third, it is not financially viable. There is no competitive tariff that a railway that has cost US$4b from Mombasa to Nairobi can charge to pay for itself. Using the trucking tariff of US$.085 per km/tonne, the debt service alone works out to equivalent of 7.5 million tonnes of freight per year, which roughly means that it would have to carry at least three times that, 22.5 million a year, to break even.
It has been my contention from the outset that Lamu port Southern Sudan Ethiopia Transport corridor could have been the priority for a new railway line, but even then, the railway should have run from Lamu to Thika and onwards to Nanyuki, as opposed to the northern route.
This is not to reinforce the marginalisation of northern Kenya—what northern Kenya needs is infrastructure connecting it to southern Kenya, not infrastructure passing through it going elsewhere. But as economics Nobel Laureate and New York Times columnist Paul Krugman once quipped, bad ideas are like cockroaches. No matter how often you flush them down the toilet, they keep coming back.
Kafrican
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Its wacky comparison at best... I don't have time to go into details.... First he said $1.2B for 200km, some other articles are quoting the same amout for 300km, Others are saying for 400km..... That's alone shows the state of confusions... The government GoT itself budgeted $400million to begin the construction on the same stretch in adddition to the turkey loan..... GoT needs to first produce official data for one to even begin comparison...
Next, He said Dar is building high speed with 'many stations' when actually their aren't that many stations that will be built, if you look at Kenyans stations, you can see that a significant amount of money went into building of those stations probably a few hundred millions, we are still yet to see the Dar stations....
Another thing, clearly the guy doesn't know that much about the rail, I mean he confesses that he only knew what speed the cargo rail will be going when they arrived in Kenya.... That info was available since 2014!!!
Last but not least... He says the Mombasa-Nairobi line should have cost us $1.5B instead of the $3.8B ($4B).... Well he probably used that $4B and the 609Km of rail to calculate the cost per km.... Did he know that of the $3.8B, $1.12B was actually designated for the purchase of 54 trains and close to 2 thousand wagons? So he should have actually calculated the cost per km on the Kenyan side using $2.6B.... He should also reduce the number of stations on the Kenyan (and subtract their cost) to be equal to the number of stations on tz side...
And BTW, where did he get that info that Tz whole rail project will cost $6Billion???
kilam
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- Aug 5, 2011
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Distance between Dar es Salaam and Morogoro = 205km. The length of the railway line (including 95 km of interchange railway ) = 300 km. The pact involves the construction of the 205km main way and 95km of interchange railway as well as railway stations along the way
Total cost = USD 1,215,282,000 (incuding VAT USD 185,382,000)
Cost per km = USD 4.05m / km (VAT inclusive) or USD 3.4m / km (VAT exclusive).
Starting time of construction: March 2017.
Estimated time to complete the project = 30 months.
Fund: 100% Government of Tanzania.
Cc MK254 Dhuks
Kafrican
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Excellent, that is the kind of info people should be having, see what happens when you have correct data, you make informed conclusion.....
The guy bongo-live quoted ended up with the conclusion that the Dar average per km is $2.75million....when the first phase is actually 4m/km.....
If you remove the $1.12B designated for the purchase of the trains from the $4B Kenyan sgr project, the cost per km is actually $4.4km ,(this 4.4m/km is actually not the acurate amount bcoz there is the mater of the stations, and also the issue of constructing bridges)
Gitimu Peter
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Plus land acquisition costs.
Geza Ulole
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Are mega projects worth billions spent?
Friday February 10 2017
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Locomotives and passenger coaches for the standard gauge railway on February 2, 2017. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP
In Summary
By DAVID NDII
More by this Author
As mega projects go, the 5,000MW initiative is the ultimate “if you build, they will come” project.
The argument was that there were many investors who were put off by our puny electricity numbers. To attract them, we needed to demonstrate that we could scale up electricity generation very dramatically. In reality, there are few industries that will start off with such huge power demand at once. Those that do, such as mining (that is, smelting the metal ores), have a long gestation themselves such that electricity plants can be built alongside the mine development itself.
But this is now water under the bridge. The initiative has been abandoned. Reason? Lack of demand. Installed capacity now stands at 2300MW, against a requirement of 1600MW. As I observed in a previous article, electricity demand grows at the same rate as the economy. At current economic growth rate and allowing for a 15 per cent reserve margin, we will need 3000MW in a decade, best case scenario is seven years if the economy accelerates as we hope it will to a seven per cent per year average.
GOOD GUIDE
But the past is not always a good guide to the future and with electricity never more so than now. The electricity industry is on the cusp of a major technology disruption, driven by rapidly falling costs of renewable power and large-scale power storage technology. Industrial scale solar installations are now commercially viable even here in Kenya. I read in the papers recently that consumer goods manufacturer Bidco is installing a 1MW solar plant at their Thika factory. Strathmore University campus also has a large-scale solar installation that feeds power to the grid, and I have heard that the UN complex is self-sufficient and feeds power to the grid on weekends for free.
But it’s not just solar that is taking customers off grid. Gorge Farm, a horticulture operation in Naivasha owned by Vegpro Group, has been in the news lately for commissioning Africa’s first biogas power plant that uses horticultural waste to generate both electricity and heat for the greenhouses, and a surplus that it puts to the grid. The Kenya Tea Development Agency (KTDA), the country’s largest manufacturer (yes, KTDA’s 60 plus tea processing plants make it by far Kenya’s largest manufacturer), is investing in mini hydro power plants to reduce its dependence on grid power.
POWER SUPPLIERS
Instead of being the captive buyers they’ve been in the past, large consumers of grid power are becoming power suppliers.
I drove by the Konza Technopolis site recently. It is still a field of dreams.
Two decades ago at the peak of its economic boom, Malaysia set its sights on becoming Asia’s information technology powerhouse. The government embarked on building Cyberjaya, a brand new technopolis envisaged as the heart of a Multimedia Super Corridor—the Palo Alto of Malaysia’s would be Silicon Valley. Today, Cyberjaya is an impressive mini city, and there is indeed a number of big technology companies located but Malaysia is nowhere near becoming the Silicon Valley of the East.
That crown went to an unheralded Bengaluru, better known as Bangalore. No one is sure how Bangalore became the Silicon Valley of India. Some attribute it to the presence of the Indian Institute of Science, the country’s premier scientific research centre, the Karnataka State government’s promotion of private tertiary education, the abundance of “bandwidth” due to the convergence of India’s three undersea fibre-optic cables there, mild climate, among other reasons.
INTERESTING TIDBIT
Whatever it is, it attracted Texas Instruments to set up shop there, founders of Infosys and Wipro to move their startups there in the mid-80s. Swanky infrastructure was not part of the pull. One of the interesting tidbits I came across while researching the subject, was a photograph of Texas Instrument’s equipment being loaded onto bullock carts. It’s not the only one. Bangalore was the first city in India to have electricity (in 1906), and the Bangalore Institute of Technology the first college to offer computer science as a separate branch of engineering. The long and short of it is the story of Bangalore is similar to that of Silicon Valley—organic development. It is not peculiar to technology hubs. It applies to all industry clusters. They cannot be contrived.
In 1946, as war-ravaged Britain is stoically surviving a crippling shortage of everything, Clement Atlee’s Labour government hit on the clever idea of alleviating the shortage of cooking oil by growing groundnuts in Tanganyika. A mission quickly dispatched there brought back a favourable report. A total of £25 million (Sh3.2 billion) was rustled up to cultivate groundnuts on 150,000 acres. After five years of battling “droughts, floods, beasts, vermin and natives”, the Groundnut Scheme was abandoned, having cost the British taxpayer the equivalent of US$2 billion (Sh258.2 billion) in today’s money.
MEGA FARM
The allure of mega farms in the tropics as solutions to food security persists, as evidenced by the frenzy of land acquisitions triggered by a global food price spike a few years ago. You can count on a few groundnut schemes in the making, and our own is looking like a prime candidate.
Food insecurity is seldom ever a production problem. Food security is defined as availability, accessibility, adequacy and acceptability of food. Each of these requirements is important for example, pork, beef and meat do not meet acceptability criteria for Muslims, Hindus and vegetarians respectively. We have two types of food insecurity in Kenya, chronic and episodic. What we are experiencing now is the episodic type but ordinary times, close to half of Kenyans are undernourished, and a quarter would not afford to meet the daily calorific requirements at all times. The vast majority of our food insecure are poor rural households, that is, food producers. Even now, we have not heard of urban poor being fed. In essence then, our food insecurity problem is a poverty problem.
The Galana-Kulalu project cost at Sh260 billion, which, at current exchange rates is in the original groundnut scheme ballpark. The number of chronically hungry Kenyan households is in the order of 2.5 million. The Galana-Kulalu project works out to Sh110,000 per household. Invested at the household and community level, that is more than enough money to get each and every one of this households out of food insecurity.
ALSO REPORTED
Tanzania has signed a deal to build a 200km railway between Dar es Salaam and Morogoro for US$1.2 billion (Sh124.3 billion). It has also been reported that the same consortium will build the first 400km phase of the new central line connecting Dar es Salaam to Rwanda and Burundi known as the DIKKM line.
The combined projects work out to 600km of rail for US$2.3 billion (Sh238.2 billion), less than half (43 per cent) of the cost of our standard gauge railway from Mombasa to Naivasha, which is about the same distance. However, the Dar-Morogoro line is more expensive as it is an electrified commuter rail with many stations, and built for a top speed of 160km per hour. The cost of the long haul DIKKM line works out to US$2.75 million (Sh284 million) per km, which is on the lower end of the global range of US$2.5 - 4 per km. At US$8 million (Sh828.6 million) per km, ours is way way out. Ethiopia’s electrified one cost US$4.6 million (Sh476.4 million) per km. At the Tanzania’s DIKKM line, the Mombasa-Nairobi line should have cost us US$1.5 billion (Sh155.4 billion), not US$4 billion (Sh414.3 billion).
CHINESE DEAL
Tanzania had signed a US$7.6 billion (Sh787.1 billion) Chinese deal to build the 2200 km DIKKM project. This still works out to a realistic US$3.45 million (Sh357.3 million) per km, but President John Magufuli thought it too expensive and went shopping. If the whole project is built at the quoted costs, it will cost US$6 billion (Sh621.4 billion) saving Tanzania US$1.5 billion (Sh155.4 billion). It is also noteworthy that the Dar es Salaam—Morogoro was tendered in September last year with a December deadline, the contract was awarded this month, and the project is to start in March. That is record time for a project of this magnitude. A year ago, this column opined that “whether by design or happenstance, Magufuli’s crusade is signalling zero corruption tolerance (and) investors can come to Tanzania with the confidence that when they encounter corruption and bureaucratic obstacles, the man at the helm can be relied on to deal with it”. It is paying off in spades.
For many Kenyans, the scale of the SGR scam did not hit home until the trains arrived. Seemingly, many people actually believed they would be whizzing across the country in the state of the art bullet trains depicted in Jubilee’s campaign images. Until they saw the vintage hand-me-down locomotives rolling off the ship, they would not let the facts that this was primarily an 80kph diesel locomotive freight railway get in the way of their imagination. The bubble now well and truly bust, it is worth revisiting the case against the SGR. My case against the SGR is built on three grounds.
BUSINESS ONE
First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking. This has not changed. We’ve seen the government decide to truck crude oil from Turkana to Mombasa, even though the “early oil” transportation proposal was made to them by Rift Valley Railways.
Second, the SGR is not a significant improvement in either capacity or cost. To start with, railway freight does not need to move quickly. Improving speed from 60kph to 80kph is inconsequential.
Third, it is not financially viable. There is no competitive tariff that a railway that has cost US$4b from Mombasa to Nairobi can charge to pay for itself. Using the trucking tariff of US$.085 per km/tonne, the debt service alone works out to equivalent of 7.5 million tonnes of freight per year, which roughly means that it would have to carry at least three times that, 22.5 million a year, to break even.
It has been my contention from the outset that Lamu port Southern Sudan Ethiopia Transport corridor could have been the priority for a new railway line, but even then, the railway should have run from Lamu to Thika and onwards to Nanyuki, as opposed to the northern route.
This is not to reinforce the marginalisation of northern Kenya—what northern Kenya needs is infrastructure connecting it to southern Kenya, not infrastructure passing through it going elsewhere. But as economics Nobel Laureate and New York Times columnist Paul Krugman once quipped, bad ideas are like cockroaches. No matter how often you flush them down the toilet, they keep coming back.
ndii@netsolafrica.com
@DavidNdii
http://www.nation.co.ke/oped/Opinio...llions-spent/440808-3808440-modebj/index.html
nomasana, sam999, NairobiWalker, hbuyosh, msemakweli, simplemind, Kimweri, Bulldog, MK254, Kafrican, Ngongo, Ab_Titchaz, mtanganyika mpya, JokaKuu, Ngongo, Askari Kanzu, Dhuks, Yule-Msee, waltham, Mzee, mombasite gabriel, Juakali1980, Boda254, mwaswast, MwendaOmo, Mwanakijiji, Iconoclastes, oneflash, Kambalanick, 1 Africa, saadeque, burukenge, nyangau mkenya, Teen-Upperhill Nairobi, kadoda11
Friday February 10 2017
email print
Locomotives and passenger coaches for the standard gauge railway on February 2, 2017. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP
In Summary
- First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking.
- Second, the SGR is not a significant improvement in either capacity or cost.
- Third, it is not financially viable.
By DAVID NDII
More by this Author
As mega projects go, the 5,000MW initiative is the ultimate “if you build, they will come” project.
The argument was that there were many investors who were put off by our puny electricity numbers. To attract them, we needed to demonstrate that we could scale up electricity generation very dramatically. In reality, there are few industries that will start off with such huge power demand at once. Those that do, such as mining (that is, smelting the metal ores), have a long gestation themselves such that electricity plants can be built alongside the mine development itself.
But this is now water under the bridge. The initiative has been abandoned. Reason? Lack of demand. Installed capacity now stands at 2300MW, against a requirement of 1600MW. As I observed in a previous article, electricity demand grows at the same rate as the economy. At current economic growth rate and allowing for a 15 per cent reserve margin, we will need 3000MW in a decade, best case scenario is seven years if the economy accelerates as we hope it will to a seven per cent per year average.
GOOD GUIDE
But the past is not always a good guide to the future and with electricity never more so than now. The electricity industry is on the cusp of a major technology disruption, driven by rapidly falling costs of renewable power and large-scale power storage technology. Industrial scale solar installations are now commercially viable even here in Kenya. I read in the papers recently that consumer goods manufacturer Bidco is installing a 1MW solar plant at their Thika factory. Strathmore University campus also has a large-scale solar installation that feeds power to the grid, and I have heard that the UN complex is self-sufficient and feeds power to the grid on weekends for free.
But it’s not just solar that is taking customers off grid. Gorge Farm, a horticulture operation in Naivasha owned by Vegpro Group, has been in the news lately for commissioning Africa’s first biogas power plant that uses horticultural waste to generate both electricity and heat for the greenhouses, and a surplus that it puts to the grid. The Kenya Tea Development Agency (KTDA), the country’s largest manufacturer (yes, KTDA’s 60 plus tea processing plants make it by far Kenya’s largest manufacturer), is investing in mini hydro power plants to reduce its dependence on grid power.
POWER SUPPLIERS
Instead of being the captive buyers they’ve been in the past, large consumers of grid power are becoming power suppliers.
I drove by the Konza Technopolis site recently. It is still a field of dreams.
Two decades ago at the peak of its economic boom, Malaysia set its sights on becoming Asia’s information technology powerhouse. The government embarked on building Cyberjaya, a brand new technopolis envisaged as the heart of a Multimedia Super Corridor—the Palo Alto of Malaysia’s would be Silicon Valley. Today, Cyberjaya is an impressive mini city, and there is indeed a number of big technology companies located but Malaysia is nowhere near becoming the Silicon Valley of the East.
That crown went to an unheralded Bengaluru, better known as Bangalore. No one is sure how Bangalore became the Silicon Valley of India. Some attribute it to the presence of the Indian Institute of Science, the country’s premier scientific research centre, the Karnataka State government’s promotion of private tertiary education, the abundance of “bandwidth” due to the convergence of India’s three undersea fibre-optic cables there, mild climate, among other reasons.
INTERESTING TIDBIT
Whatever it is, it attracted Texas Instruments to set up shop there, founders of Infosys and Wipro to move their startups there in the mid-80s. Swanky infrastructure was not part of the pull. One of the interesting tidbits I came across while researching the subject, was a photograph of Texas Instrument’s equipment being loaded onto bullock carts. It’s not the only one. Bangalore was the first city in India to have electricity (in 1906), and the Bangalore Institute of Technology the first college to offer computer science as a separate branch of engineering. The long and short of it is the story of Bangalore is similar to that of Silicon Valley—organic development. It is not peculiar to technology hubs. It applies to all industry clusters. They cannot be contrived.
In 1946, as war-ravaged Britain is stoically surviving a crippling shortage of everything, Clement Atlee’s Labour government hit on the clever idea of alleviating the shortage of cooking oil by growing groundnuts in Tanganyika. A mission quickly dispatched there brought back a favourable report. A total of £25 million (Sh3.2 billion) was rustled up to cultivate groundnuts on 150,000 acres. After five years of battling “droughts, floods, beasts, vermin and natives”, the Groundnut Scheme was abandoned, having cost the British taxpayer the equivalent of US$2 billion (Sh258.2 billion) in today’s money.
MEGA FARM
The allure of mega farms in the tropics as solutions to food security persists, as evidenced by the frenzy of land acquisitions triggered by a global food price spike a few years ago. You can count on a few groundnut schemes in the making, and our own is looking like a prime candidate.
Food insecurity is seldom ever a production problem. Food security is defined as availability, accessibility, adequacy and acceptability of food. Each of these requirements is important for example, pork, beef and meat do not meet acceptability criteria for Muslims, Hindus and vegetarians respectively. We have two types of food insecurity in Kenya, chronic and episodic. What we are experiencing now is the episodic type but ordinary times, close to half of Kenyans are undernourished, and a quarter would not afford to meet the daily calorific requirements at all times. The vast majority of our food insecure are poor rural households, that is, food producers. Even now, we have not heard of urban poor being fed. In essence then, our food insecurity problem is a poverty problem.
The Galana-Kulalu project cost at Sh260 billion, which, at current exchange rates is in the original groundnut scheme ballpark. The number of chronically hungry Kenyan households is in the order of 2.5 million. The Galana-Kulalu project works out to Sh110,000 per household. Invested at the household and community level, that is more than enough money to get each and every one of this households out of food insecurity.
ALSO REPORTED
Tanzania has signed a deal to build a 200km railway between Dar es Salaam and Morogoro for US$1.2 billion (Sh124.3 billion). It has also been reported that the same consortium will build the first 400km phase of the new central line connecting Dar es Salaam to Rwanda and Burundi known as the DIKKM line.
The combined projects work out to 600km of rail for US$2.3 billion (Sh238.2 billion), less than half (43 per cent) of the cost of our standard gauge railway from Mombasa to Naivasha, which is about the same distance. However, the Dar-Morogoro line is more expensive as it is an electrified commuter rail with many stations, and built for a top speed of 160km per hour. The cost of the long haul DIKKM line works out to US$2.75 million (Sh284 million) per km, which is on the lower end of the global range of US$2.5 - 4 per km. At US$8 million (Sh828.6 million) per km, ours is way way out. Ethiopia’s electrified one cost US$4.6 million (Sh476.4 million) per km. At the Tanzania’s DIKKM line, the Mombasa-Nairobi line should have cost us US$1.5 billion (Sh155.4 billion), not US$4 billion (Sh414.3 billion).
CHINESE DEAL
Tanzania had signed a US$7.6 billion (Sh787.1 billion) Chinese deal to build the 2200 km DIKKM project. This still works out to a realistic US$3.45 million (Sh357.3 million) per km, but President John Magufuli thought it too expensive and went shopping. If the whole project is built at the quoted costs, it will cost US$6 billion (Sh621.4 billion) saving Tanzania US$1.5 billion (Sh155.4 billion). It is also noteworthy that the Dar es Salaam—Morogoro was tendered in September last year with a December deadline, the contract was awarded this month, and the project is to start in March. That is record time for a project of this magnitude. A year ago, this column opined that “whether by design or happenstance, Magufuli’s crusade is signalling zero corruption tolerance (and) investors can come to Tanzania with the confidence that when they encounter corruption and bureaucratic obstacles, the man at the helm can be relied on to deal with it”. It is paying off in spades.
For many Kenyans, the scale of the SGR scam did not hit home until the trains arrived. Seemingly, many people actually believed they would be whizzing across the country in the state of the art bullet trains depicted in Jubilee’s campaign images. Until they saw the vintage hand-me-down locomotives rolling off the ship, they would not let the facts that this was primarily an 80kph diesel locomotive freight railway get in the way of their imagination. The bubble now well and truly bust, it is worth revisiting the case against the SGR. My case against the SGR is built on three grounds.
BUSINESS ONE
First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking. This has not changed. We’ve seen the government decide to truck crude oil from Turkana to Mombasa, even though the “early oil” transportation proposal was made to them by Rift Valley Railways.
Second, the SGR is not a significant improvement in either capacity or cost. To start with, railway freight does not need to move quickly. Improving speed from 60kph to 80kph is inconsequential.
Third, it is not financially viable. There is no competitive tariff that a railway that has cost US$4b from Mombasa to Nairobi can charge to pay for itself. Using the trucking tariff of US$.085 per km/tonne, the debt service alone works out to equivalent of 7.5 million tonnes of freight per year, which roughly means that it would have to carry at least three times that, 22.5 million a year, to break even.
It has been my contention from the outset that Lamu port Southern Sudan Ethiopia Transport corridor could have been the priority for a new railway line, but even then, the railway should have run from Lamu to Thika and onwards to Nanyuki, as opposed to the northern route.
This is not to reinforce the marginalisation of northern Kenya—what northern Kenya needs is infrastructure connecting it to southern Kenya, not infrastructure passing through it going elsewhere. But as economics Nobel Laureate and New York Times columnist Paul Krugman once quipped, bad ideas are like cockroaches. No matter how often you flush them down the toilet, they keep coming back.
ndii@netsolafrica.com
@DavidNdii
http://www.nation.co.ke/oped/Opinio...llions-spent/440808-3808440-modebj/index.html
nomasana, sam999, NairobiWalker, hbuyosh, msemakweli, simplemind, Kimweri, Bulldog, MK254, Kafrican, Ngongo, Ab_Titchaz, mtanganyika mpya, JokaKuu, Ngongo, Askari Kanzu, Dhuks, Yule-Msee, waltham, Mzee, mombasite gabriel, Juakali1980, Boda254, mwaswast, MwendaOmo, Mwanakijiji, Iconoclastes, oneflash, Kambalanick, 1 Africa, saadeque, burukenge, nyangau mkenya, Teen-Upperhill Nairobi, kadoda11
Kafrican
JF-Expert Member
- Jan 26, 2015
- 7,251
- 7,037
Are mega projects worth billions spent?
Friday February 10 2017
email print
Locomotives and passenger coaches for the standard gauge railway on February 2, 2017. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP
In Summary
Advertisement
- First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking.
- Second, the SGR is not a significant improvement in either capacity or cost.
- Third, it is not financially viable.
By DAVID NDII
More by this Author
As mega projects go, the 5,000MW initiative is the ultimate “if you build, they will come” project.
The argument was that there were many investors who were put off by our puny electricity numbers. To attract them, we needed to demonstrate that we could scale up electricity generation very dramatically. In reality, there are few industries that will start off with such huge power demand at once. Those that do, such as mining (that is, smelting the metal ores), have a long gestation themselves such that electricity plants can be built alongside the mine development itself.
But this is now water under the bridge. The initiative has been abandoned. Reason? Lack of demand. Installed capacity now stands at 2300MW, against a requirement of 1600MW. As I observed in a previous article, electricity demand grows at the same rate as the economy. At current economic growth rate and allowing for a 15 per cent reserve margin, we will need 3000MW in a decade, best case scenario is seven years if the economy accelerates as we hope it will to a seven per cent per year average.
GOOD GUIDE
But the past is not always a good guide to the future and with electricity never more so than now. The electricity industry is on the cusp of a major technology disruption, driven by rapidly falling costs of renewable power and large-scale power storage technology. Industrial scale solar installations are now commercially viable even here in Kenya. I read in the papers recently that consumer goods manufacturer Bidco is installing a 1MW solar plant at their Thika factory. Strathmore University campus also has a large-scale solar installation that feeds power to the grid, and I have heard that the UN complex is self-sufficient and feeds power to the grid on weekends for free.
But it’s not just solar that is taking customers off grid. Gorge Farm, a horticulture operation in Naivasha owned by Vegpro Group, has been in the news lately for commissioning Africa’s first biogas power plant that uses horticultural waste to generate both electricity and heat for the greenhouses, and a surplus that it puts to the grid. The Kenya Tea Development Agency (KTDA), the country’s largest manufacturer (yes, KTDA’s 60 plus tea processing plants make it by far Kenya’s largest manufacturer), is investing in mini hydro power plants to reduce its dependence on grid power.
POWER SUPPLIERS
Instead of being the captive buyers they’ve been in the past, large consumers of grid power are becoming power suppliers.
I drove by the Konza Technopolis site recently. It is still a field of dreams.
Two decades ago at the peak of its economic boom, Malaysia set its sights on becoming Asia’s information technology powerhouse. The government embarked on building Cyberjaya, a brand new technopolis envisaged as the heart of a Multimedia Super Corridor—the Palo Alto of Malaysia’s would be Silicon Valley. Today, Cyberjaya is an impressive mini city, and there is indeed a number of big technology companies located but Malaysia is nowhere near becoming the Silicon Valley of the East.
That crown went to an unheralded Bengaluru, better known as Bangalore. No one is sure how Bangalore became the Silicon Valley of India. Some attribute it to the presence of the Indian Institute of Science, the country’s premier scientific research centre, the Karnataka State government’s promotion of private tertiary education, the abundance of “bandwidth” due to the convergence of India’s three undersea fibre-optic cables there, mild climate, among other reasons.
INTERESTING TIDBIT
Whatever it is, it attracted Texas Instruments to set up shop there, founders of Infosys and Wipro to move their startups there in the mid-80s. Swanky infrastructure was not part of the pull. One of the interesting tidbits I came across while researching the subject, was a photograph of Texas Instrument’s equipment being loaded onto bullock carts. It’s not the only one. Bangalore was the first city in India to have electricity (in 1906), and the Bangalore Institute of Technology the first college to offer computer science as a separate branch of engineering. The long and short of it is the story of Bangalore is similar to that of Silicon Valley—organic development. It is not peculiar to technology hubs. It applies to all industry clusters. They cannot be contrived.
In 1946, as war-ravaged Britain is stoically surviving a crippling shortage of everything, Clement Atlee’s Labour government hit on the clever idea of alleviating the shortage of cooking oil by growing groundnuts in Tanganyika. A mission quickly dispatched there brought back a favourable report. A total of £25 million (Sh3.2 billion) was rustled up to cultivate groundnuts on 150,000 acres. After five years of battling “droughts, floods, beasts, vermin and natives”, the Groundnut Scheme was abandoned, having cost the British taxpayer the equivalent of US$2 billion (Sh258.2 billion) in today’s money.
MEGA FARM
The allure of mega farms in the tropics as solutions to food security persists, as evidenced by the frenzy of land acquisitions triggered by a global food price spike a few years ago. You can count on a few groundnut schemes in the making, and our own is looking like a prime candidate.
Food insecurity is seldom ever a production problem. Food security is defined as availability, accessibility, adequacy and acceptability of food. Each of these requirements is important for example, pork, beef and meat do not meet acceptability criteria for Muslims, Hindus and vegetarians respectively. We have two types of food insecurity in Kenya, chronic and episodic. What we are experiencing now is the episodic type but ordinary times, close to half of Kenyans are undernourished, and a quarter would not afford to meet the daily calorific requirements at all times. The vast majority of our food insecure are poor rural households, that is, food producers. Even now, we have not heard of urban poor being fed. In essence then, our food insecurity problem is a poverty problem.
The Galana-Kulalu project cost at Sh260 billion, which, at current exchange rates is in the original groundnut scheme ballpark. The number of chronically hungry Kenyan households is in the order of 2.5 million. The Galana-Kulalu project works out to Sh110,000 per household. Invested at the household and community level, that is more than enough money to get each and every one of this households out of food insecurity.
ALSO REPORTED
Tanzania has signed a deal to build a 200km railway between Dar es Salaam and Morogoro for US$1.2 billion (Sh124.3 billion). It has also been reported that the same consortium will build the first 400km phase of the new central line connecting Dar es Salaam to Rwanda and Burundi known as the DIKKM line.
The combined projects work out to 600km of rail for US$2.3 billion (Sh238.2 billion), less than half (43 per cent) of the cost of our standard gauge railway from Mombasa to Naivasha, which is about the same distance. However, the Dar-Morogoro line is more expensive as it is an electrified commuter rail with many stations, and built for a top speed of 160km per hour. The cost of the long haul DIKKM line works out to US$2.75 million (Sh284 million) per km, which is on the lower end of the global range of US$2.5 - 4 per km. At US$8 million (Sh828.6 million) per km, ours is way way out. Ethiopia’s electrified one cost US$4.6 million (Sh476.4 million) per km. At the Tanzania’s DIKKM line, the Mombasa-Nairobi line should have cost us US$1.5 billion (Sh155.4 billion), not US$4 billion (Sh414.3 billion).
CHINESE DEAL
Tanzania had signed a US$7.6 billion (Sh787.1 billion) Chinese deal to build the 2200 km DIKKM project. This still works out to a realistic US$3.45 million (Sh357.3 million) per km, but President John Magufuli thought it too expensive and went shopping. If the whole project is built at the quoted costs, it will cost US$6 billion (Sh621.4 billion) saving Tanzania US$1.5 billion (Sh155.4 billion). It is also noteworthy that the Dar es Salaam—Morogoro was tendered in September last year with a December deadline, the contract was awarded this month, and the project is to start in March. That is record time for a project of this magnitude. A year ago, this column opined that “whether by design or happenstance, Magufuli’s crusade is signalling zero corruption tolerance (and) investors can come to Tanzania with the confidence that when they encounter corruption and bureaucratic obstacles, the man at the helm can be relied on to deal with it”. It is paying off in spades.
For many Kenyans, the scale of the SGR scam did not hit home until the trains arrived. Seemingly, many people actually believed they would be whizzing across the country in the state of the art bullet trains depicted in Jubilee’s campaign images. Until they saw the vintage hand-me-down locomotives rolling off the ship, they would not let the facts that this was primarily an 80kph diesel locomotive freight railway get in the way of their imagination. The bubble now well and truly bust, it is worth revisiting the case against the SGR. My case against the SGR is built on three grounds.
BUSINESS ONE
First, the failure of the current railway line is not infrastructure failure, but rather a business failure, specifically, mismanagement of Kenya Railways, in part because of powerful people’s interests in trucking. This has not changed. We’ve seen the government decide to truck crude oil from Turkana to Mombasa, even though the “early oil” transportation proposal was made to them by Rift Valley Railways.
Second, the SGR is not a significant improvement in either capacity or cost. To start with, railway freight does not need to move quickly. Improving speed from 60kph to 80kph is inconsequential.
Third, it is not financially viable. There is no competitive tariff that a railway that has cost US$4b from Mombasa to Nairobi can charge to pay for itself. Using the trucking tariff of US$.085 per km/tonne, the debt service alone works out to equivalent of 7.5 million tonnes of freight per year, which roughly means that it would have to carry at least three times that, 22.5 million a year, to break even.
It has been my contention from the outset that Lamu port Southern Sudan Ethiopia Transport corridor could have been the priority for a new railway line, but even then, the railway should have run from Lamu to Thika and onwards to Nanyuki, as opposed to the northern route.
This is not to reinforce the marginalisation of northern Kenya—what northern Kenya needs is infrastructure connecting it to southern Kenya, not infrastructure passing through it going elsewhere. But as economics Nobel Laureate and New York Times columnist Paul Krugman once quipped, bad ideas are like cockroaches. No matter how often you flush them down the toilet, they keep coming back.
ndii@netsolafrica.com
@DavidNdii
http://www.nation.co.ke/oped/Opinio...llions-spent/440808-3808440-modebj/index.html
nomasana, sam999, NairobiWalker, hbuyosh, msemakweli, simplemind, Kimweri, Bulldog, MK254, Kafrican, Ngongo, Ab_Titchaz, mtanganyika mpya, JokaKuu, Ngongo, Askari Kanzu, Dhuks, Yule-Msee, waltham, Mzee, mombasite gabriel, Juakali1980, Boda254, mwaswast, MwendaOmo, Mwanakijiji, Iconoclastes, oneflash, Kambalanick, 1 Africa, saadeque, burukenge, nyangau mkenya, Teen-Upperhill Nairobi, kadoda11
the first phase of Dar SGR will cost 4m/km not far from ethiopias or kenyas
Gitimu Peter
JF-Expert Member
- Oct 6, 2016
- 205
- 211
Anyone quoting David Ndii's arguments on the Sgr is defunct ab Initio.