Rift Valley Railways confident of future


(Posted 09th July 2014)

Rift Valley Railways, the concessionaire for the two railway systems of Kenya and Uganda, has confirmed that delivery of 20 new locomotives, manufactured by General Electric, is expected during the second half of 2014, as are an additional 1.400 rail wagons. This capacity boost is financed by the final tranche of around 70 million US Dollars of an overall nearly 165 million US Dollars in funding generated last year through capital injection by Qalaa Holdings of Egypt and a loan package availed through international and regional financial institutions such as the ADB, KFW, IFC and Kenya’s Equity Bank.

Rift Valley Railways says their investments in the railway infrastructure and new systems over the past 26 months is greater than what the two governments and rail operators Kenya Railways and Uganda Railways have invested over the past 26 years. Information received yesterday also confirms that all concession payments are now up to date in both countries and that the required investments are three times the minimum amount the company was committed to spend under the current 5 year concession period.

The opening of the previously disused line from Tororo via Gulu to Pakwach has also opened up additional cargo traffic to and from Southern Sudan and Eastern Congo with the two railways heads offering a convenient spring board for loading and offloading cargos going both ways, substantially reducing road transport by trucks.

Line improvements in both Kenya and Uganda along the most accident prone sections have improved average delivery times and now allow for heavier loads which has brought bulk cargo business back from road to rail.

Said a source close to RVR, when asked to comment on the upcoming competitive threat through the new standard gauge railway which will link the port of Mombasa with Nairobi, Kampala and Kigali: ‘The completion of the new railroad is several years away. By that time is the narrow gauge line fully refurbished and average speeds will then only be marginally slower and within acceptable range for users of rail services. When it comes to tariffs, the present rail system has the advantage that they will not have to repay billions of dollars in loans for construction and rolling stock which will affect the pricing of a ton of cargo transported. Narrow gauge rail systems in other parts of the world have shown that they can run profitably and meet the requirements of regulators and the market’.

The company remained silent though on the question of passenger trains and it is understood that only three trains a week are operating between Nairobi and Mombasa at present, unlike in the railway’s prime days when two trains operated every day between the two cities and other passenger trains operated to Kisumu and Kampala. Kisumu and Kampala are no longer served by rail with dozens of busses plying the route every day and the added competition through low cost airlines like Jambojet which now connects Nairobi with Kisumu twice a day.

Rift Valley Railways is now owned 85 percent by Africa Railways Limited, a subsidiary of Egypt’s Qalaa Holdings, formerly known as Citadel and the remaining 15 percent are held by Uganda’s Bomi Investments.

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