11 February 2013

Kenya: Rift Valley Railways Wants Concession Respected

Kampala — Following recent media reports that Kenya had inked a secret deal with China to build a standard gauge line from Mombasa to Malaba, Rift Valley Railways, the concessionaire of the Uganda and Kenya line has asked the parties to respect the concession.

Kenya's Business Daily last year also reported that Kenya and Uganda are jointly negotiating with China to fund and construct a new standard gauge railway that will connect the two countries.

According to the reports, the new rail line is aimed at shifting traffic from roads to high-speed trains that are more efficient in the movement of goods from Mombasa port to several destinations across the country as well neighboring nations.

Analysts say that the current meter-gauge railway lines being used in East Africa have become obsolete resulting in high operation costs and minimal returns for business men. This has also put a strain on roads as traders opt for trucks to move their cargo.

The deal with China could put a strain on the existing concession agreed to with RVR in both Uganda and Kenya.

According to the current concession, RVR's interests are guaranteed by clauses that stipulate that the governments of Kenya and Uganda cannot - during the tenure of the concession - introduce changes that jeopardize RVR's profitability.

Mr. Brown Ondego, the Executive Vice Chairman RVR in an e-mail to the East African Business Week said that the concession agreement (revised deeds of amendment) signed between RVR and the governments of Uganda and Kenya in 2010 provides a well-defined process for the planning, construction and operation of the standard gauge railway, which includes offering RVR the opportunity to operate rolling stock on the railway line.

"It is our expectation that the concession agreement will be adhered to by all parties", Ondego said in the e-mail.

In a related development, RVR has started work on Uganda's northern line that has not been in operation for close to 18 years due to insecurity and vandalism.

Work on the 500Km Tororo - Pakwach line commenced on November 19, 2012 and will cost approximately $2m in a three- phased approach.

Mr. Brown Ondego told the East African Business Week, "The Northern line is a very important part of our concession and will play an increasingly strategic role in our business development going forward due to existing opportunities to open up business in landlocked Southern Sudan and in the Albertine Graben as well as Northern Uganda."

He said that the first phase which includes clearing of bushes, weeding, and removal of anthills is being undertaken by Kato contractors, a Ugandan Engineering company.

The second phase will involve replacement of vandalized locations along the line and the final phase will involve restoration of washed out areas due to flooding especially in Soroti and installation of new culverts where required.

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