New loan deal ensures full payment for new rail locomotives


(Posted 11th September 2014)

After taking delivery of three brand new General Electric locomotives earlier this month, out of a total of 20 ordered, has RVR yesterday confirmed that they have secured a 20 million US Dollar loan facility from Standard Bank of South Africa and CFC Stanbic Bank to complete payments for the delivery of the new locos all of which are due to have joined the fleet by April next year. RVR itself will inject 5 million US Dollars from internal sources into the purchase deal which is the first for new locomotives in decades after former rail operators Kenya Railways and Uganda Railways had failed to modernize and upgrade crucial assets.

Combined with the ongoing refurbishment of older locomotives in the company’s own workshop in Nairobi will the 20 brand new engines double the Rift Valley Railways loco fleet, creating much needed extra capacity for trains between the Indian Ocean port of Mombasa, Nairobi and Kampala.

The company also confirmed that ongoing wagon refurbishment will equally double the available rolling stock to about 2.400 wagons of different types by middle of next year., allowing more trains with higher loads to meet growing import and export volumes for both countries.

This will arguably put RVR into pole position vis a vis the new planned standard gauge railway which is a multi-billion US Dollar project aiming to connect Mombasa, via Nairobi and Kampala with Kigali. Pundits are already arguing that the cost of the new rail line will cause cargo tariffs to be too high in comparison with the existing narrow gauge rail system and that inspite of a guaranteed percentage of cargo landed at the Mombasa port the charges may be too high and might have to be subsidized for years to come. Fodder for thought no doubt and as always time will tell how this will pan out.

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