MAJOR CHANGES IN OWNERSHIP OF RIFT VALLEY RAILWAYS ANNOUNCED
(Posted 02nd April 2014)
Egypt’s Citadel Capital has yesterday completed the long expected acquisition of a 34 percent stake previously held by Kenya’s TransCentury, a company listed on the Nairobi Stock Exchange.
TransCentury had given statutory notice in line with NSE and Capital Market Authority regulations a few weeks ago, making it clear that major changes were on the way for the East African rail consortium.
Citadel, through its fully owned subsidiary Africa Railways Limited, now holds 85 percent of all Rift Valley Railways shares and has emerged the dominant shareholder of the company, which was in its formative stages repeatedly in the news of wrangles between the then owners, instigated by South Africa’s Sheltam which has since departed from the scene.
Since the arrival of Citadel as a core investor have the fortunes of the company started to change, as capital injected was used to address key bottlenecks in its operation like the complete refurbishment of nearly 70 kilometres of line between Mombasa and Nairobi, which was responsible for most of the downtime on the line before. In Uganda a series of culverts were replaced, again making the line more secure and cutting the journey time from the port of Mombasa to Uganda’s capital Nairobi by at least 8 days. Also re-opened was the branch line from Tororo to Gulu, which now serves as a railhead for bulk cargo to and from South Sudan.
Additional measures taken by the company was the introduction to GPS line and train management, which has further improved the efficiency of the system.
Engine and rolling stock refurbishments have also brought significant productivity improvements and the purchase of a more locomotives, doubling the fleet during the 2014 financial year, will finally allow for more trains and heavier loads to be carried over the refurbished tracks.
Key performance targets were for the first time met in 2013 by Rift Valley Railways and with the ownership changes it can be expected that the management of the company can now build on the success of last year and make Rift Valley Railways again a major force for cargo bulk movements across Eastern Africa.
The recent announcements about the launch of construction of a new standard gauge railway between Mombasa and Nairobi – Rift Valley Railways continues to operate on a narrow gauge line – is not seen by RVR as an immediate threat to their business as they can offer substantially cheaper cargo rates using the existing tracks and railway system while the new railway will be saddled with initially immense debts, the service of which will necessitate considerably higher cargo tariffs.
RVR does also operate 3 weekly passenger rail services between Nairobi and Mombasa but no passenger trains presently serve Kenya’s lake side city of Kisumu or Kampala on long distance journeys.
