Reprieve for Rift Valley Railways as Uganda stands by the concession agreement


(Posted 09th April 2017)

As mentioned in a prior article on Kenya Railways’ decision to terminate the concession for Rift Valley Railways, the link shown below for ease of access, have clear differences emerged with partner Uganda Railways.

Information received overnight from Kampala suggests that while KR had indeed sent a team to the Ugandan capital to persuade their partners to jointly terminate the concession, this was apparently not well received by the Ugandans who subsequently did not serve their own termination letter.
Sources have suggested that Uganda would seek other alternatives to have RVR make good on both, pending payments for royalties and concession fees but also for the uplift increase in cargo carried, and not opt to shut the door in RVR’s face.
One of the shareholders from Uganda, Bomi Holdings, owns 15 percent of the company’s shares besides Egypt’s Qalaa which owns the remaining 85 percent but has signalled their intent to sell their stake.
RVR’s management has in the meantime obtained a court order halting any action subsequent to Kenya Railways’ termination letter for at least 30 days, giving the company time for emergency board meetings to seek solutions which would leave the concession intact.
The move by Kenya Railways is now seen as mischievious and deliberately timed to throw spanners in the works of Qalaa’s ongoing discussions with a potential US based buyer and as suggested in the previous article probably politically motivated to preempt RVR claims over loss of business when the SGR project goes on line by middle of this year. Should Qalaa be able to sell its stake and the new shareholder be willing to inject additional operational fund into RVR, would the company be able to clear the concession fee backlog almost instantly and concentrate to increase cargo uplift to meet targets, something which would put Kenya Railways into a serious bind come the start of the SGR, short for Standard Gauge Railway, operations.
One thing at present is sure though, that Uganda Railways will not be bullied into joining the termination letter and the unilateral action by Kenya Railways may therefore lack legal foundation.
As always, time will tell so keep watching this space.