- The EastAfrican has learnt that representatives from the Ministry of Transport, Kenya Railways Corporation, RVR and CCCC held a meeting last week to discuss how to ensure both RVR and SGR co-exist.
Kenya-Uganda railway concessionaire Rift Valley Railways (RVR) needs at least $500 million to compete with the standard gauge railway.
“We need fresh capital to prepare ourselves for competition from SGR and execute our next phase of growth,” said group chief executive Isaiah Okoth.
RVR is staring at an uncertain future with SGR expected to commence operation next year and the government awarding China Communications Construction Company (CCCC) the contract to operate the new line.
The EastAfrican has learnt that representatives from the Ministry of Transport, Kenya Railways Corporation, RVR and CCCC held a meeting last week to discuss how to ensure both RVR and SGR co-exist.
“The meeting on Monday discussed policy issues on how SGR and RVR will work,” said a source who did not disclose details of the discussion.
According to Mr Okoth, RVR risks being obliterated when SGR starts operations unless the company attracts new investors or the two governments inject capital into it.
Mr Okoth argues that since SGR is being built using taxpayers money and the line handed to a private company to operate, the two governments must also put money in the rehabilitation and maintaining of the meter gauge railway on which RVR runs as an operator.
Levelling the playing field
“The SGR will not be a big threat if the playing field is levelled. Currently, the playing field is not level because we have to take care of everything, including rehabilitation of tracks, investing in rolling stock and paying concession fees. SGR will only focus on traffic operations,” he said.
Since taking over the concession to operate the 1,300km metre gauge railway from Mombasa to Kampala in 2006, RVR says it has invested over $300 million in among others, rehabilitating infrastructure, acquiring new engines and wagons, new technology like computerised control and training drivers.
Despite the investments, the company has remained in the red with annual cargo haulage stagnating at five per cent of the total cargo arriving at the Port of Mombasa.
“Rail is more expensive than road because of the unfavourable operating environment. That is why we cannot increase tonnage,” said Mr Okoth, adding that the unfavourable environment may be the reason investors in RVR get fatigued and opt out at the earliest opportunity.
