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East Africa Tourism

Rift Valley Railways back on course

Wolfgang H. Thome  Sep 21, 2008

KAMPALA, Uganda (eTN) - The management at Rift Valley Railways, led by well-respected businessman Brown Ondego as executive chairman, moved swiftly since their installation to show both the Kenyan and Ugandan governments that they not only mean business but have the capacity to transform the two railway companies into a viable entity.

The former South African majority shareholders have now also reduced their stake at RVR allowing the new partners to not only take up a significantly higher percentage but also to allow for subsequent capital injection. Loans from German Development Bank KfW and the International Finance Corporation, the World Bank’s private sector lending arm, also seem back on course to the tune of over US$50 million for the acquisition of new locomotives and rolling stock. These loans were withheld for the former management team as increasing doubts over their ability to delivery the objectives of the business plan arose and when one set of bad figures and bad news seems to have chased the next.

The new management has presented a phased plan for the company to improve the quality of the rail line and installations, rehabilitation of existing locomotives and wagons and key upgrades of the existing railway line. The capacity of the railway for goods transport from the Indian Ocean port of Mombasa to Kampala is presently not enough to cater for the increased traffic volumes and average train speed is also a multiple below industry average, with trains taking up to two weeks to reach Kampala from the Kenyan coast.

The plans are now due to be examined by the two governments but are expected to be approved, putting to rest speculations that the RVR contract may be canceled. Ugandan business magnate Charles Mbire has meanwhile been appointed to the RVR board of directors, increasing the Ugandan representation at senior level within the company.

The board of the company also visited the Nalukolongo railway workshops, which were rehabilitated some years ago under a German funded assistance package and where the rehabilitation and upgrades of locomotives and wagons is likely to take place in coming months. It was learned that under the former South African-led management this key asset was being neglected and underutilized, a situation likely to fundamentally change from now on.

Rift Valley Railways back on course
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