Rift Valley Railway concession queried…
Sections of the business community have queried the decision to award the management of the Kenya – Uganda Railway network to Rift Valley Railways (RVR).
RVR was in 2005 granted a 25-year concession to operate the 2,352-kilometer rail line between Uganda and Kenya. The financing deal was expected to boost efforts to improve the interconnection between Kampala and Nairobi and the region’s biggest port in Mombasa. This in turn would strengthen the economic development of the East African region.
Transport prices in East Africa are among the highest in the world due to heavy reliance on road transport. Rail transport in the region lacks the adequate capacity to meet the transport needs of the region. An efficient rail network would bring East African rail transport costs down by as much as 35% due to the operational and fuel efficiency of rail.
Mr. William Ojonyo, the Nairobi Branch Chairman for Kenya International Freight and Warehousing Association (KIFWA) says that a lot of money is being awarded to the rehabilitation of the rail network and yet there’s nothing to show for it.
He added, "Look at a scenario where the port of Mombasa is congested yet the Nairobi ICD and Kisumu ICD are virtually empty with a direct connection from the port thus an extended port that is not utilized yet belonging to Kenya Ports Authority (KPA)."
Mr. Ssebaggala Kigozi, the Executive Director of Uganda manufacturers’ Association (UMA) also said that the manufacturers, we depend on transport a lot for incoming as well as outgoing goods.
"We bring in a lot of raw materials in bulk. However for the past five years, we have experienced a lot of challenges. We have always cried for an efficient railway network, it is not yet there. We have therefore been forced to resort to road transport for our merchandize has proved to be very expensive.
However, Mr Dennis Kashero the General Manager, Marketing & Communications at RVR says that before RVR came in, the Railway was an operation that had been neglected and had not received any investments for over three decades.
"At the time at which both the Kenya and Uganda governments made a call to the concession, it was on a free fall. This can be attributed to lack of investment that would have been used to service the assets, some of which are still in usable condition if rehabilitated," he said.
He also added that RVR received capital financing in July, 2010 from six Development Finance Institutions (DFIs) and a local bank to deliver a targeted $287 million capital expenditure program to finance the five-year turn around.
"Contrary to the reports that there is nothing to show, in terms of performance, during the Financial Year 2010/11 RVR’s performance stood at 1.6 Million tonnes and in the year 2011/12 the same was at 1.46 Million tonnes.
RVR’s primary focus now is to improve the condition of the permanent way so as to significantly improve transit times and this will enable us operate bigger capacity trains into Kampala thereby improving our reliability, Kashero said.
He however said that, while the investments have been made, the returns would not be immediate especially due to the long lead times for ordering railway parts. "Until we have delivered some of our immediate investments and rehabilitated and serviced the working assets, the operations may continue not be up to par," he said.
Citadel Capital that is the biggest RVR shareholder with 51% shares was expected to invest $82 million into the project. Other shareholders in RVR are Transcentury Ltd in Nairobi with 34% and Bomi Holdings 15%.
Find out more about projects on-the -go in Africa being undertaken to improve corridors by attending Africa Rail 2013, the Ports & Harbours Show or Road Trans – all taking place on 24-26 June 2013 in South Africa
Article Ref: http://allafrica.com/stories/201207161790.html
