RVR in quest for KSh1.78 billion in six months

Last Updated 13 years ago by Kenya Engineer

By Daisy Gakuu

Rift Valley Railways (RVR) is in the hunt for KSh1.78 billion from its investors within six months to fit in the government’s good books. RVR needs the coffers to overhaul the Kenya-Uganda dilapidated track, repair wagons and locomotives after last month’s completion of a new 73 km line between Mombasa and Nairobi at a cost of KSh1.7 billion.

This follows a warning by the government in May this year to terminate the concession agreement if RVR fails to meet terms of the pact, including performance and fees payments.

Since 2010, the firm’s shareholders have raised KSh5.3 billion. The owners include Egypt’s PE Citadel Capital (at 51 per cent), TransCentury (at 34 percent) and Uganda’s Bomi Holdings that has a 15 percent wager.

RVR won a 25-year dispensation in November 2006 to run the 2,352km Kenya-Uganda railway on the cargo business in Kenya and Uganda and a five-year contract for the passenger unit in Kenya, whose tenure was extended by months in 2008.

“Shareholders have so far injected KSh5.29 billion as part of the capital for infrastructure upgrade,” said the Vice President of Citadel, Hassan Massoud.“The balance KSh1.78 billion should be provided over the next six months,” he added.

The shareholder injection of KSh7.1 billion  was part of KSh24.7 billion  upgrade plan, which was to cover five years from 2010, and included KSh3.5 billion generated from operations and KSh14.1 billion syndicated loan.
Official statistics show that the total distance covered by the operator dropped from 389 million Kilometers in 2009 to 221 million in 2012.

According to the firm, the renovation has been slow due late disbursement of loans by financiers, including the International Finance Corporation (IFC), the African Development Bank (AfDB) and Equity Bank. The delay is partly behind the push by the government for a review of the concession agreement. The pressure to revamp the Kenya-Uganda track comes with the experts say, that it is vital in fostering trade relations and bolstering economy in East Africa.

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