PUBLISHED ON July 24th, 2014


Kenya and Uganda have issued fresh terms to Rift Valley Railways (RVR) and given the rail operator nine months to put its house in order for improved performance.

The two governments Tuesday said they had given RVR till February 2 to increase its cargo haulage above 1.6 million tonnes from the current 1.2 million tonnes, and to invest more cash in the upgrade of the KenyaUganda line and purchase of new wagons.

The States maintains that RVR has failed to live up to expectations nine years since it won the concession.

A joint communication indicated that the States rejected RVR’s one year window to meet the terms of its concession and asked Kenya Railways and Uganda Railways to re-invigorate the monitoring of the rail firm on a quarterly basis.

“While the performance trend since April 1 has improved, the same has not met the expectations of both governments,” read the joint communiqué.

“The governments…will make further assessment of performance of RVR during the next nine months,” added the notice dated May 2.

Uganda and Kenya did not state actions that will be taken after February, but last year Transport secretary Michael Kamau warned that the governments could terminate their agreement if RVR failed to meet terms of the pact, including performance and fees payments.

But RVR says the turnaround efforts that started in January 2012 have begun to be felt and that it will double its cargo capacity this year.

“Cargo carrying capacity will double with the delivery of 20 General Electric locomotives ordered last year,” said the rail firm in a statement, adding that its volumes grew 40 per cent in the three months to March.

It reminded the government that it has spent $120 million (Sh10.5 billion) to upgrade the rail business over the past 26 months, more than what has been spent on the track over the past 26 years.

But railway transport continued to lose the cargo business share as importers preferred to use roads, underlining the need for its quick revamp.

Official data shows that RVR ferried 1,214 tonnes of cargo last year compared to 1,394 tonnes in 2012 and accounted for 5.4 per cent of the cargo that landed at the Mombasa port, down from 7.3 per cent a year earlier. The rest of the freight was handled by trucks.

RVR won a 25-year contract to run the 2,352km KenyaUganda railway in November 2006 for the cargo business, and a five-year contract for the passenger unit.

China Road and Bridge Corporation was picked to build a new Sh450 billion railway from Mombasa starting October and will complete works in 2018.

Source: Business Daily

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