The government has trimmed billions of shillings from several Standard Gauge Railway (SGR) operational projects in the latest supplementary budget as it channels more funds toward extending the railway from Naivasha to Malaba at the Kenya–Uganda border.
Budget changes for the financial year ending June 30, 2026 show that the Treasury reduced allocations for key activities along the existing railway corridor between Mombasa and Naivasha while increasing resources meant for construction of the western extension of the line.
One of the areas affected by the cuts is the planned installation of a digital monitoring and protection system along the SGR route. The Treasury removed Sh1.6 billion from the project, which had been designed to oversee and safeguard the railway infrastructure.
In the previous budget released in June last year, the government had allocated Sh2.3 billion for a unified security system covering SGR Phase 1 and Phase 2A. The system was intended to strengthen monitoring along the busy rail corridor that stretches across several counties.
Reducing the security allocation may expose the railway to risks since the line covers hundreds of kilometres and has in the past faced threats such as vandalism and sabotage.
Kenya Railways will also have to reduce spending on locomotive wheelsets used by the trains. Funding for the purchase of the wheel-and-axle assemblies has been lowered from Sh2.2 billion to Sh1.1 billion.
Plans to introduce an SGR passenger ticketing system have also been affected by the budget adjustments. The State Department for Transport had initially set aside Sh300 million for the project, but the allocation has now been cut by half.
While several operational programmes have been scaled down, the government has increased financing for the extension of the railway from Naivasha toward the western border.
The project has received an additional Sh14 billion in the supplementary estimates, raising the total allocation for the current financial year to Sh30 billion compared with the earlier budget of Sh16 billion.
The planned line will run from the current terminus at Suswa in Narok County to Malaba on the Kenya–Uganda border, a move aimed at improving cargo movement to neighbouring landlocked countries.
According to Treasury estimates, constructing the new section of the railway will require about Sh502.9 billion.
President William Ruto’s administration expects to secure most of this financing, about Sh455.35 billion, from foreign investors whose identities have not been made public.
Kenya is also pursuing a Sh390 billion securitised bond estimated at between $2.6 billion and $3.0 billion to support the construction of the Naivasha to Malaba section. The government has described the plan as a “creative financing” model that relies on future tax revenues instead of conventional external borrowing.
To pave the way for the expansion, Kenya Railways Corporation has indicated it will acquire more than 5,000 acres of land required for the railway corridor.
Meanwhile, Uganda has begun preparations for the construction of its own SGR section leading to Tororo, which connects to Malaba on the Kenyan side of the border.
Kenya expects the extension to strengthen the role of the modern railway, which has been facing intense competition from road transport. The line currently ends at Suswa, making it difficult for traders to move goods by rail to destinations beyond the Rift Valley.
The railway was initially conceived as a regional project after Kenya, Uganda and Rwanda signed a tripartite agreement in 2014 to develop a standard gauge railway running from Mombasa through Kampala to Kigali.
However, the project stalled after the line in Kenya stopped at Suswa when China declined to finance the remaining section following a failure to reach a financing arrangement with Uganda.