The Kenya Railways Corporation (KRC) has instructed China Road and Bridge Corporation (CRBC) to immediately procure liability insurance for the Standard Gauge Railway (SGR) flagship project.
SGR passenger train Madaraka Express has been operating without insurance cover since its launch by President Uhuru Kenyatta on June 1st this year.
The Madaraka Express, which ferries 2,400 passengers and goods worth millions of shillings to and from Mombasa daily, has been operating without insurance.
A number of insurance companies submitted their quotations and held meetings with senior Ministry of Transport, Kenya Railways and CRBC officials to discuss packages on offer for the Sh327 billion project.
After several meetings and tendering process, AIG was picked. But months later, the Chinese concessionaire continues to stall on awarding the tender to AIG.
According to schedule, third party liability cover is Sh3 million per passenger, amounting to Sh3.6 billion per one way trip of 1,200 passengers.
Cover for the double stack containers amounts to hundreds of millions of shillings.
Without an insurance cover, Kenya Railways would be hard pressed to compensate passengers and cargo clients in case of an accident.
Some of the items to be insured are equipment worth Sh8.2 billion, which include 31 passenger wagons, 60 freight wagons, 15 passenger and cargo locomotives (part of which is one used engine worth Sh2.6 billion), 182 General Rail Switches and six passenger service facilities.
So dire is the situation that in a letter dated August 30, Kenya Railways Managing Director Atanas Maina instructed CRBC to act on the liability cover claims issue immediately.
“We refer to the above matter and the discussions of the meeting held on August 25. The meeting discussed the policies that the operator is required to maintain as per the operations and maintenance contract.
It was agreed that you will engaged AIG Kenya to provide insurance cover liability claims and that you would avail a draft copy of insurances that you are taking up with AIG Kenya for our consideration and approval,” the letter by Mr Maina to CRBC General Manager Operations Mombasa-Nairobi SGR Operations Project, Huan Jin Can, reads.
From the meeting, it was also agreed that pending the finalisation of particularised details in the policies, the concessionaire would instruct AIG Kenya to issue cover note -- a temporary document sent to the insured whilst the underwriter completes the paperwork.
“This is therefore to request that you avail the draft policy documents and a confirmation that AIG Kenya has now issued the requisite cover note as agreed,” the letter further says.
Contacted, a CRBC official who only identified himself as Mr Lin said they were unaware of the procedure and were waiting for instructions from the Kenya Railways on what to do.
“We don’t know how it is done here in Kenya. We are waiting for instructions,” the official said.