Inside plan to split Kenya Railways and rope in private players

Passengers board train at the Kenya Railways Station in Nairobi. [David Gichuru, Standard]

The government plans to open up Kenya’s railway network to different operators and at the same time split Kenya Railways into two entities, one to operate the country’s network of railway lines and a regulator that will oversee what is expected to be an expanded railway sector. 

The Railways Bill 2024 has proposed the unbundling of Kenya Railways, which currently undertakes all the sector’s functions, with the establishment of the Kenya Railways Corporation and the Railway Regulatory Authority.

According to the Bill, the reform process is aimed at making the country’s railway system “open access”, which will mean the railway infrastructure will be available “for use by multiple operators.

The Corporation envisioned in proposed law will have an expanded mandate compared to that of the current railway operator.

While the new KRC will continue owning and operating the country’s network of railway lines as well as the prime property across the country, the Bill proposes bringing onboard other players into the railway sector and using the same infrastructure using modalities such as concessioning and public private partnerships.

The corporation, according to the proposed law, can “enter into Public Private Partnerships in accordance with the Public Private partnerships Act” as well as “develop, own and manage the non-operational landed assets on commercial basis directly or through a subsidiary which shall be established for that purpose”.

The Railway Regulatory Authority will oversight and licence KRC as well as other players who will come on board.

“The proposed object of the Railway Bill, 2024 establishes Kenya Railways Corporation and the Railway Regulatory Authority as the railway economic and safety regulator and aims at enhancing effectiveness and efficiency in the provision of services and operations in the railway sector by providing open access to railway infrastructure for operators,” said Kenya Railways in a public notice inviting Kenyans to give their take on the proposed law.

It will have different public participation forums across major towns in the country between August 26 and September 13.

The publication of the Railways Bill 2024 followed approval of the bill by the Cabinet in January this year. 

The Cabinet at the time noted that the Kenya Railways had been sitting on prime assets including the railway network and real estate whose potential remained untapped.

It expects a new law, once in place, to unlock the value of these assets through bringing onboard private capital and expertise.

Cabinet said Bill has set out modalities to solidify Kenya’s leadership as a regional logistics hub.

The Bill once enacted will repeal the 1978 law, the Kenya Railways Act Cap 398.

It further explained that the proposed legislation would initiate new ways of running railways and separating the business of freight, commuter and land development. 

KRC’s large parcels of land, many of them in prime locations in major towns and cities, are expected to be among the most attractive to private sector and could be transformed into railway cities.

Kenya Railways is currently implementing the Nairobi Railway City project at the railway station, whose first phase is expected to cost Sh30 billion. The development is now expected to be replicated in other towns using private capital.