Kenya Railways' Losses Widen To Sh28 Billion Despite SGR's First Surplus

Kenya Railways Corporation's (KRC) net loss widened by Sh477 million to Sh28.16 billion in the year ended June 2025, up from Sh27.68 billion the previous year. The corporation has not recorded a profit in over a decade.

The headline figure masks a more encouraging story at the operational level. KRC's operating loss actually narrowed by 65 percent to Sh581.5 million, its strongest operational showing in years, helped by freight volumes hitting a record 8.16 million tonnes and total revenue climbing 18.6 percent to Sh30.52 billion.

What erased that progress was debt servicing. Interest on the government's on-lent SGR loan came to Sh25.97 billion, pushing the corporation into negative equity of Sh121.08 billion despite the improved core business. The loan, originally borrowed from China's Export-Import Bank to fund the SGR, remains the corporation's dominant liability.

The metre gauge railway (MGR), Kenya's original colonial-era line, is the other drag on the balance sheet. Its passenger numbers fell from 3 million to 2.51 million over the year, while the SGR carried 2.55 million passengers, overtaking the older network for the first time.

The SGR's own numbers finally turned positive. It posted a surplus of Sh181.7 million for the year, reversing a Sh1.18 billion loss the year before, its first surplus since commercial operations began in 2017. Revenue rose to Sh18.5 billion from Sh16.8 billion, while operating costs increased only marginally, by Sh290 million, to Sh18.3 billion.

Freight was the bigger driver. SGR freight revenue grew 9.1 percent to Sh19.42 billion as haulage expanded 10.2 percent to 7.05 million tonnes, according to the corporation's disclosures. KRC is now counting on sustained freight growth and rental income from its land holdings as its main routes back to profitability.

That growth outlook is tied to an extension now under construction. Works began in July 2026 on the Naivasha to Kisumu to Malaba line, a roughly 371-kilometre (230-mile) addition that will connect the existing SGR network to the Kenya-Uganda border. The project is split into two phases: Naivasha to Kisumu covers about 264 kilometres (164 miles), including a spur line to the planned Kisumu Port terminal, while Kisumu to Malaba adds a further 107 kilometres (66 miles).

The extension's cost has been reported differently across sources, with figures up to Ksh 500 billion. It is being built by China Communications Construction Company (CCCC). Engineering works on the Naivasha-Kisumu section alone include 13 tunnels, 23 bridges and 376 culverts. Completion is targeted for mid to late 2027.

Kenya Railways expects the Malaba link to shift freight traffic off the Nairobi-Kisumu highway and onto rail, cutting logistics costs for cargo destined for Uganda and the wider Great Lakes region. The line is designed to eventually link with Uganda's own SGR development running from Kampala to Malaba.

Land acquisition remains ongoing, with the corporation working alongside the National Land Commission (NLC) to compensate landowners affected along the corridor. Financing details for the extension, including a proposed bond backed by the Railway Development Levy Fund, had not been finalised as construction began.