By any standard, and despite land acquisition frustrations, the project’s pace of implementation can be termed timely. The SGR now needs to embark on the task of marketing its services to ensure early utilisation.

This is necessary to generate early cash inflows to begin offsetting its debt commitments.

The SGR is perhaps the most significant project ever undertaken by Kenya in recent times. In terms of national and regional impacts, the last such significant project was building of the Mombasa-Nairobi petroleum pipeline in 1978.

When Kenya Pipeline Company (KPC) commissioned the Mombasa-Nairobi line it was to replace rail transportation of petroleum over that section.

At the time, bulk oil transshipment by road in the region was virtually zero. Although there was no legal protection against competition for the pipeline, the seven multinational oil companies did commit to exclusively use the pipeline.

However, there was a proviso by the oil companies that tariffs should be fair and commercial. Fortunately, there was regulation of petroleum prices at the time which permitted a full tariff pass-through to the market.

We can therefore correctly say that KPC had a captive and compliant clientele, which may not necessarily be the case with SGR.

With the imminent completion of the rail, SGR should already have formulated a business model for discussions with stakeholders who include potential clients and competitors (road transporters and RVR).

Free market model

There was an initial mention of the “take or pay” capacity protection framework that guarantees returns for the SGR investment.

There is also the free market model which recognises the existence of competition, in which case SGR would need to offer competitive tariffs based on value added services. Whichever approach, SGR needs to enunciate their strategy in good time to permit smooth and timely entry in the sector.

It is not apparent that SGR has in place an institutional and organisational capacity to begin laying out a market entry strategy and its implementation. In this respect, I think the SGR is seriously running out of time.

KPC actually appointed their nucleus management team in 1974, four years prior to project completion in 1978.

Like KPC, the SGR’s initial project termination will be in Nairobi – with firm plans for an additional stretch to Naivasha.