Reuben Olita And Agencies
17 October 2007
Kampala — A South African-led consortium will invest $29m in the 106-year-old Kenya-Uganda Railway by June next year to revitalise operations on the decrepit track.
Rift Valley Railways Corporation (RVR) said in a statement it had invested $11.5m since it took control of the facility in November last year and planned to inject an additional $17.5m by June 2008.
The Kenyan and Ugandan governments handed over the money-losing colonial-era railway "Lunatic Express" to RVR under a 25-year concession last year. The company was supposed to pay $5m initially to Nairobi and Kampala plus 11.1% of the gross revenue.
The $29m surpasses the $5m RVR must invest annually over the next five years in infrastructure upgrades under the leasing agreement between the firm and the governments.
The consortium expects to reap benefits from the recently expanded East African Community - Kenya, Uganda, Tanzania, Rwanda and Burundi and the creation of a customs union, which opened up markets of 90 million people.
RVR's chief Roy Puffet said 400 railway workers would be retrenched and paid off in full.
"It is important for the media to note that a bloated workforce is counterproductive to our efforts to restructure this organisation thus the need to retrench and retain staff in core functions," Puffet said.
"We shall, however, be retaining some of the retrenched workers as preferred suppliers as part of our commitment to boost local entrepreneurial capacities."
The Kenya-Uganda railway began service on December 20, 1901 after more than a decade of planning and construction.
The line runs some 900km from Kenya's Indian Ocean port of Mombasa, through Nairobi, and up the Rift Valley to Kisumu on the shores of Lake Victoria. From there, rail-steamer services go to Uganda, where a separate line runs.
Due to mounting financial woes, the East African Railways Corporation, as it was then known, halted operations after the East African Community collapsed in 1977.
Its largest section was taken over by the government-owned Kenya Railways Corporation, but poor management, lack of maintenance and insufficient funds for the purchase of new engines forced it to cut back services.
RVR is made up of Sheltam Rail Company of South Africa with a 61% share, two other South African firms, Comazar Limited and CDIO Institute for Africa Development Trust, with 14%, a Kenyan company, Primefuels (Kenya) Limited, with 15% and Mirambo Holdings of Tanzania with 10%.
The consortium's lead investor, the Sheltam Group of Companies, operates railways in South Africa, Mozambique and Zimbabwe while Comazar runs national railroads in Cameroon, Ivory Coast, Burkina Faso and northern Madagascar.
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