This is a change in government policy because it was originally intended to first build the section from Nairobi to Malaba on the border with Uganda. However, the National Treasury now favours building the 398km line to Ksumu first because it says Kisumu has the shortest access to other East African countries using ferry links across Lake Victoria.

"The construction of Phase II of the standard-gauge line from Nairobi to the shore of Lake Victoria will commence in the 2015-16 financial year under a design and build framework," says the National Treasury.

Work on the $US 3.6bn first phase of the standard-gauge project, to build a 609km line from Mombasa to Nairobi, got off to a shaky start last year when construction was halted temporarily due to a dispute over compensating land owners along the route.

Meanwhile, in December a Ugandan parliamentary select committee launched a probe into the award of an $US 8bn contract for the 250km single-track Kampala - Malaba standard-gauge railway to China Harbour Engineering Company (CHEC).