Malaba, Kenya — Uganda Government has gone to court as a means of cancelling the Rift Valley Railways (RVR) deal for failure to fulfill its mandate of facilitating business.

The Uganda Minister of State for Works, Eng. John Byabagambi told East African Business Week last Friday that government has won round one by taking the matter to court and had been given a green light by court to cancel the concession given to RVR. Sources in Kenya told EABW the Kenyan government cancelled RVR's concession without the burden of going to court while Uganda has gone to court and been given a go ahead to cancel the concession. Since the advent of Rift Valley Railways not more than 15% of the cargo destined for the hinterland from Mombasa is handled by rail.

According to the minister, this has caused the cost of doing business to rise and consequently, the price of goods to go through the roof. Currently, transporting a 40-unit container wagon from Mombasa to Malaba border post costs around US$100,000 by rail while by road, a similar unit would be over US$150,000.

"I agree with the business community's concerns. The inefficiencies at RVR have raised the cost of doing business and that state of affairs is absurd. However, I would wish you to state that even if the rail network was working 100%, railway would not handle all the cargo destined for Uganda, Rwanda, Burundi, Democratic Republic of Congo and the Sudan. We would still use road," the minister said.

In the present situation, a lot of pressure has been put on the road and the Kenya Roads Authority has banned trucks of over three axles because they have been damaging the roads.

In fact, all vehicles with four sets of hind tyres (4 axle) cannot ply on any of Kenyan roads and what the truck drivers have done is to remove the fourth axle.

Transporters are saying that a truck that previously carried 50,000 litres of petrol now carries 30,000 litres at the same cost as it was when using four axles. This has been one of the reasons why fuel prices and commodities are rising in the hinterland.

The road network now handles about 85% of all cargo destined for countries west of Kenya. This has resulted in further damage of the roads in Uganda yet if the rail system including the water transport were working less impact would be felt on the road.

"We have been disappointed by RVR and we want them to leave so that a competent person comes in to run the railway. We are aware rail is supposed to handle 85% of all in-coming cargo and only 15% by road. We can never be comfortable with the present situation," Byabagambi charged.

Every week, RVR brings in 1,500 containers that cross to the Ugandan border yet rail should at least bring in 10,000 containers.

Inside sources at Malaba, Kenya intimated to EABW that the reason why there are few containers crossing to Uganda is because RVR has few locomotive engines and only one to three trains cross to Uganda per day.

A source at RVR Kenya that demanded anonymity said some locomotives that were serving the Magadi route for soda ash destined for export will be diverted to serve the Ugandan route because the demand for soda ash for export has greatly reduced because of the credit crunch.

The Rift Valley Railways Consortium (RVRC) was established to manage the parastatal railways of Kenya and Uganda. The consortium won the bid for private management of the century-old Kenya-Uganda railway in 2006. RVRC is led by Sheltam Rail Corporation of Sheltam Trade Close Corporation (STCC) of South Africa that claimed had experience with management of railways. Minor partners of the consortium are Kenya's Prime Fuels (15%), Mirambo Holdings of Tanzania (10%) and Comazar (10%) and the CDIO Institute for Africa Development Trust (4%), both of South Africa.

The consortium had promised to invest in the railway system, upgrade it, reduce inefficiencies, utilize a smaller work force and generate a yearly concession fee of 11.1% in each country. The joint concession was to last 25 years.