Inter-regional Standard Gauge Railway lines from Lamu to Isiolo, Isiolo to Juba, Isiolo to Addis Ababa, and Nairobi to Isiolo

Cost Estimate

  • Costs for construction of LAPSSET Corridor Railway and procurement of rolling stocks are estimated at approximately US$ 7,100 million in total, including civil works US$ 3,480, tracks US$ 1,200, rolling stock US$ 1,220, signal and telecom US$ 520, buildings USD$ 300, and others in million.

Economic Evaluation

  • The Railway has overall Economic Internal Rate of Return (EIRR) of 15.6% for all sections combined. The project is considered feasible from the viewpoint of national economy.

Financing Plan

  1. In consideration of the past experience of failure in concessioning the existing railways in Kenya,  government  involvement  for  the  initial  capital  investment  for  the  LAPSSET Corridor railway will be indispensable, because the cost is huge.
  2. Another important fund raising method is to procure funds not only from multi-lateral and bi-lateral sources such as co-financing, but also from the beneficiary countries of the Corridor, i.e. Southern Sudan and Ethiopia.
  3. The PPP scheme could be applied, whereby the private sector participates in management and operation of the railway with adequate expertise and financial capacity based on lease contract of the infrastructure with the government.

Current Status

The Feasibility and Preliminary Designs was undertaken and is expected to proceed to Detailed Engineering Design stage. The Government of Kenya and the Government of Ethiopia signed a Bilateral Agreement to jointly pursue the development of the LAPSSET SGR. A Memorandum of Understanding (MoU) was signed between LCDA and Inter-Governmental Authority on Development (IGAD) to facilitate the financing of this stage though an Infrastructure Project Preparatory Fund (IPPF) available through the New Partnership for African Development (NEPAD).

The Government of Kenya undertook a due diligence exercise between 22nd and 31st May, 2016 on the China Civil Engineering Construction Corporation which undertook the feasibility study and detailed design on the LAPSSET Corridor railway line on the Kenyan side. CCECC is the firm that is undertaking the construction of the 756 Km Addis Ababa – Djibouti railway line.

Ethiopia has already completed construction of the Addis Ababa to Modjo section and is currently planning to commence the construction of the Modjo – Hawassa section. Equally, there are plans to connect and upgrade the line between Nairobi and Nanyuki and connect the same through Isiolo to the LAPSSET SGR.

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