The old narrow railway line linking Kampala to Malaba on the Kenyan border, which is facing undue delays in securing funding for conversion into standard gauge will get an investment of US$ 205 million from Uganda. With these investments, the important railway line, which can considerably impact the movement of goods from landlocked countries to ports, will get an impetus for early completion. The upgraded railway line is expected to boost monthly freight capacity to 120,000 metric tonnes by 2026 from the current 20,000 tonnes. Presently, the railway line, due to lack of capacity for haulage, is refusing the demand from the customers to haul cargoes. The result is that transporters are using costly truck services, adding to the transaction cost. The standard gauge railway (SGR) line , which was opened in 2017 for movement of passengers were later thrown open to freight haulage in January 2018. The project was conceived some six years ago but hampered by lack of finances. Due to the limitation on the capacity for handling tonnage, the railway line is uneconomical. SGR connects East Africa’s landlocked countries with Kenyan port of Mombasa. The problem has started with the delays in the funding of the US$ 2.3 billion Kampala-Malaba segment when the expected funding did not come from Export-Import Bank of China, which earlier had agreed to chip in 85% of the project cost. One reason for China developing cold feet over financing the project is the fall in the expected earning from the project and the apprehension that whether Kenya would be able to repay the loan taken with lower expected earnings. According to Kenya National Bureau of Statistics released recently, SGR generated sales of US$ 57 million only in 2018 in its full year of operations, which is almost 45% lesser than what it was estimated. This is far below the operating cost of US$ 120 million. The fall in revenue from the expected targets have forced the railway authorities to increase the fare, which did not go well with the businesses and passengers alike
