$16 Billion to be Allocated for Lappset SGR Development Cost

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The Government of Kenya is going to need at least Ksh2.4 trillion ($16 billion) for the Lappset SGR Development Cost on the Lamu Port-South Sudan-Ethiopia-Transport (Lappset) corridor, according to the estimations made by the Kenya Railways Corporation.

According to the information released by the parastatal, it shall cost a total of Ksh523.05 billion ($3.49 billion) to set up a 544.4 kilometre Standard Gauge Railway link to connect both towns of Lamu and Isiolo and an extra Ksh476.7 billion ($3.178 billion) to further make an extension of the railway line from the town of Isiolo to Moyale covering a distance of 475.9 kilometers.

Cost of Constructing Lappset SGR

Additionally, Kenya Railways made another estimation that another Ksh358.8 billion ($2.392 billion) will be needed to connect both Isiolo and Nairobi via SGR covering a distance of 278.6 kilometers and an additional Ksh385.95 billion ($2.573 billion) for the remaining stretch that covers a distance of 325.35 kilometers between Mariakani and Lamu. Nonetheless, the parastatal has shown confidence in being able to raise a total of Ksh275.9 billion ($1.84 billion) or approximately 11.4% of the overall cost of the project by the fiscal year of 2027/28 with support of funding from the central government, borrowed loans, and collections acquired from the Railway Development Levy Fund (RDLF) and loans.

Length of the Lappset SGR

Generally, the entire stretch of the railway shall cover a total distance of 2,377.45 kilometers, every kilometer of it translating into a cost of Ksh1 billion ($6.667 million). In the year 2014, the Kenyan government commenced the construction of Phase 1 of the Standard Gauge Railway between the two cities of Nairobi and Mombasa that covers a distance of 472 kilometers. Phase 2A, the Nairobi-Naivasha covering a distance of 120 kilometers was built in 2017. The Lappset SGR Development cost was financed by a loan acquired from China that amounted to $5.08 billion.

“The Standard Gauge Railway has enabled the expansion of the Inland Container Depot (ICD) that is located in Nairobi, Embakasi, and the construction works of the other ICD that is located at Naivasha, Mai Mahiu,” Kenya Railways Corporation stated.

“This has greatly contributed to de-congesting the seaport of Mombasa and boosted seamless transit of goods headed to the western region of Kenya and the neighboring countries”, Kenya Railways added.

As for now, two feasibility studies have been conducted to explore the feasibility of the Lappset corridor by Japan Port Consultants in the year 2009 and another study was done in the year 2015 by the China Civil Engineering Corporation. The second study concluded that the project would cost $10.4 billion.

Challenges Facing Lappset SGR Development

The proposal of coming up with the Lappset SGR Developmet is unfortunately not yet feasible as the project has failed to kick off due to lack of sufficient funds and also the insecurity aspect that has been experienced in the country. Additionally, Kenya is also being faced with a huge pile of debts which has become dire as a result of the depreciating shilling value that has led to a surge in the foreign currency external loans.

The Lappset SGR Development Cost is such a colossal venture, which is expected to be the most expensive project in the history of Kenya. The project is deemed to cost even much higher than the estimated figures quoted by the Kenya Railways, keeping in mind the fact that parastatal calculated the project cost of the Lappset project at an exchange rate of Ksh150/US dollar.

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