3 November 2010

Kenya: Brazilian Firm to Manage RVRI

Nairobi — A leading global rail group América Latina Logística will manage Rift Valley Railways Investments (Pty) Ltd (RVRI), the operator of the national railways of Kenya and Uganda.

RVR on Wednesday announced that it had signed a management and technical services agreement with leading global rail group.

Under the terms of the agreement, the firm will provide key support to the company's five-year, three-point rehabilitation and investment program to improve on safety and efficiency of rail operations across Kenya and Uganda.

The first 24-month phase of the program begins in November 2010. "I can think of no better partner with whom to embark on this important and ambitious program than América Latina Logística," said the Executive Chairman at RVRI Mr Brown Ondego.

He said the management firm was chosen because they were leading rail operators who had proved their mettle in turnaround of rail companies in the world, among them the privatisation of Brazil's national railway.

Based in Brazil, América Latina Logística is the largest independent company of its kind in Latin America, where it operates railways and highways serving clients across many countries.

The firm will provide RVRI with key management and operational staff and will oversee the transfer of technology. These, Mr Ondego noted, will include proprietary technologies developed by the firm, including rail management software systems.

"Moreover, this agreement is structured so that the firm's compensation is directly linked to specific operational and financial goals at RVRI," he said.

He said they expected the firm to replicate the success of emerging-markets rail operators like Brazil since it was privatised. Rehabilitation of the railway line is part of the mandate which is aimed at tackling the problem of derailments by replacing worn-out rails.

Mr Ondego said RVRI is finalising its order for new rails with global suppliers. The firm will also help RVRI to address maintenance of locomotives to improve reliability and enhance hauling capacity.

The firm's mandate will include substantial investment in IT systems. He said the firm had proven to be a trustworthy partner for RVRI, having worked with the company to develop the five-year investment and rehabilitation plan.

The group's first assignment will be the recruitment of key RVRI staff to enhance capacity of the management team. Mr Ondego said this was the first step towards re-building the national railway as promised earlier.

Kenya and Uganda awarded RVR a 25-year concession to run the 2000 kilometres railway line but have largely been disappointed after failure to improve services due to financing issues.

This led to exit of the managing director, Mr Roy Puffet under a cloud of controversy, with many accusing him of failure to improve its operations and lack of tangible gains from the concessionaire.

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