The National Treasury has set aside $250 million for phase two of the standard gauge railway (SGR) in the financial year starting July as the government seeks to make the Naivasha Inland Container Depot (ICD) economically viable.
The allocation is part of the funds that the Treasury has allocated to boost major infrastructure projects across the country to ease the movement of cargo.
Treasury Cabinet Secretary Ukur Yatani also allocated $18.5 million for the construction and rehabilitation of the ICD.
The Malaba metre gauge railway line, which will play a critical role in connecting the Naivasha ICD to neighbouring Uganda and other countries in the Great Lakes region, received $18 million.
"Mr Speaker, to expand railway transport to the rest of the country, I have set aside $250 million for Phase II of the standard gauge railway," said Mr Yatani while releasing the 2021/22 budget.
A further $10 million has been allocated to complete rehabilitation of the Nairobi-Nanyuki meter-gauge railway line and $6.4 million to complete rehabilitation of the Nakuru-Kisumu line.
The CS said rehabilitation and subsequent use of the Kisumu port will enhance efficiency in regional trade as it will ease the movement of goods.
Uganda recently started revamping its old railway line, an indicator that the country is now gearing up for a smooth connection of railway cargo from the Naivasha ICD depot. Kampala signed a $46 million deal with a Chinese firm to rehabilitate an old metre gauge railway line between Malaba and Kampala.
The 260-kilometre Kampala line will be linked to the SGR track in Naivasha through the metre gauge railway that Kenya is currently upgrading.
Plans to link the Malaba line to the SGR come as Kenya prepares to clear goods imported through the Mombasa port and headed to western Kenya and the neighbouring countries of Uganda, the Democratic Republic Congo and South Sudan at the Naivasha dry port.
President Uhuru Kenyatta in 2019 announced that Kenya would allocate a 10-acre piece of land to South Sudan at the Naivasha ICD Industrial Park to ease the movement of goods to the neighbouring nation.
Mr Yatani said the government has provided various incentives at the ports including exempting the fuel supplied to the shipping lines from import and excise 25 duty, value-added tax as well as railway development levy and import declaration fees.
He said to further attract more ships to the ports, particularly to the recently launched Lamu port, the government would review the arrangements on fueling by vessels calling at the Kenyan ports to allow ship-to-ship refuelling and establishment of fuel bunker facilities.