28 July 2006

East Africa: Kenya And Uganda Railways Takeover Date Postponed

Nairobi — The planned takeover of the Kenya Railways Corporation by the Rift Valley Railways through a concessioning has been shelved.

In a joint communique, the Governments of Kenya and Uganda on Thursday announced the postponement of the takeover by the concessionaire from August 1, to November 1.

The communique indicated that the date change was meant to allow the finalisation of some outstanding conditions.

"To facilitate a smooth transfer of operations from the current management to the concessionaire and to enable fulfillment of all the conditions stipulated in the agreements, the parties have agreed to extend the transfer of operations from August 1to November 1," the statement said.

According to the statement, the three-month extension will also allow the two Governments to implement country specific transitional measures aimed at ensuring smooth operation of railway services before the handover. This will also cover core labour related issues, including settlement of terminal benefits.

The review, the statement indicated, will also allow the concessionaire to finalise project financing arrangements needed for longer-term investments.

However, there are indications that the shelving of the takeover date may have been occasioned by a delay in the short-listing of the workers.

According to documents available to The Standard, the firm engaged by the concessionaire to undertake staff assessment and recruitment of workers from the corporations to be retained is yet to complete its job.

According to the documents, Delloite Consulting Ltd recruitment exercise is expected to be concluded by the end of September.

Senior and middle management staff to be hired by RVR will be assessed next week, while those of other staff members has been set for August 7 and 18.

The two Governments had in 2003 agreed to undertake a joint concession of Kenya and Uganda Railways Corporations.

The process culminated in the signing of the concession agreement with the winning bidder - the Rift Valley Railways on April 7.

The concessionaire is expected to rehabilitate the railway networks and breathe life into the operations of the cash-strapped corporations.

RVR is also set to revive wagon ferry link between Kisumu and Port Bell in Uganda.

According to an agreement signed with the two Governments, the concessionaire will run the railways for 25 years, during which he will pay an annual concessioning fee equivalent to 11.1 per cent of its revenues from business and Sh74 million per year for passenger services in Kenya.

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