Kenya Railways Corporation is facing renewed pressure to fix its ageing railway businesses after their combined operating losses climbed to Sh2.89 billion in the year to June 30, even as the Standard Gauge Railway (SGR) helped the corporation return to an overall operating profit.
The legacy businesses increased their operating deficit by Sh719.6 million from Sh2.16 billion recorded in the previous financial year, with freight on the Meter Gauge Railway (MGR) accounting for the largest share of the losses.
MGR freight posted an operating loss of Sh2.07 billion, compared with Sh1.36 billion in the year ended June 2025. The poor result came alongside a drop in the amount of goods moved on the railway, further weighing on the performance of the service.
KRC reported that it transported 942,390 metric tonnes of freight during the year, against a target of 1,382,928 metric tonnes. This represented 68.2 per cent of the planned volume and was 15 per cent lower than the 1.11 million metric tonnes transported in the previous financial year.
"During the 2025/26 financial year, the corporation transported 942,390 metric tonnes of freight against an annual target of 1,382,928 metric tonnes, achieving 68.2 per cent of the annual target. This represented a decline of 15 per cent compared to the 1.11 million metric tonnes transported in the 2024/25 financial year," KRC says in a review of its latest performance.
The MGR passenger service was also unable to cover its operating costs, although its deficit improved slightly during the year.
Its operating loss stood at Sh667.98 million, down from Sh712.9 million in the previous year. In contrast, the Mv Uhuru ferry saw its loss increase to Sh108.59 million from Sh61.57 million.
The Railways Training Institute (RTI) recorded an operating deficit of Sh31 million, up from Sh20.27 million, while the cargo and logistics centre reduced its loss to Sh4.09 million from Sh8.56 million.
These businesses, together with KRC’s properties, form part of the corporation’s long-running operations. The MGR passenger and freight services have been in operation for decades, while the SGR was added after its launch in 2017.
The stronger performance of the SGR helped cushion KRC against the losses recorded by the older operations. As a result, the corporation moved from an operating loss of Sh562.47 million in the previous year to an operating profit of Sh1.63 billion in the latest financial year.
KRC is now putting more effort into restoring the MGR network, including bringing back railway lines that have remained idle in different parts of the country. The plan also includes linking the MGR to the SGR so that freight and passengers can move between the two systems more easily.
Several lines have already undergone rehabilitation, including the Voi-Taita Taveta, Kisumu-Butere, Leseru-Kitale and Gilgil-Nyahururu routes. KRC has also opened new stations along the rehabilitated routes.
The move is aimed at giving the older railway system a new lease of life as demand for the SGR continues to grow on the Mombasa-Nairobi route and beyond to Naivasha.
MGR passenger traffic, however, has gone in the opposite direction, with the number of passengers falling by nearly half over the past four years.
KRC also brought back the Mv Uhuru in 2020 after a 14-year break. The ferry's return supported the movement of goods between the Port of Kisumu and Port Bell in Uganda. The corporation also opened the RTI campus in Kisumu in the same year.
The widening losses from the older businesses could make it harder for KRC to meet its longer-term financial ambitions. The corporation is targeting an operating profit of Sh9.09 billion by June 2028, compared with an operating loss of Sh2.4 billion recorded in the year to June 2023.
The latest performance has raised fresh pressure on KRC to turn around the legacy operations as it seeks to achieve the 2028 profit target.