Monday, May 12, 2014


Turning around the fortunes of the Kenya-Uganda railway is not unlike changing a huge ship's course – progress is slow, often imperceptible but once the course is set hard to reverse.
The analogy by Ugandan businessman Charles Mbire was an apt one.

Last week RVR held its first (?) share holder and stakeholder meeting since the Kenyan investment firm Transcentury’s 34 percent investment was bought by the concession’s anchor investor Citadel Capital, an investment company out of Egypt.

Citadel Capital now control 85 percent of the company through Africa Railways. The remaining 15 percent is held by Ugandan firm BOMI holdings that is wholly owned by Mbire.

"For all intents and purposes RVR came out of that board room skirmish unscathed if not more energised following a willingness by its institutional partners to provide the finance to pay off Transcentury...

Transcentury exited the consortium claiming that the investment did not live up to their expectations and that they had bigger fish to fry.

However RVR’s stakeholders in Nairobi last week affirmed the viability of the project and in many instances would have been forgiven for drooling into their soup at the potential of the concession if executed properly.

Decades of neglect mean that road transport has supplanted rail as the preferred means to and from Mombasa.

At the height of its powers in 1970 the railway was handling four million tons of cargo annually a figure that is yet to be attained under the new management, though they project that they will shift five million tons of cargo by the end of 2015. The port of Mombasa handles 20 million tons of cargo annually, suggesting that even if they attain their short term target they will still be a lot of room for expansion.

In the US rail accounts for 43 percent of all intercity volume.

This is key for Uganda and its hinterland because three in every four tons ferried are destined for Ugandan and beyond, clearly we will be among the main beneficiaries of an efficient RVR.

As landlocked country we should jump at any initiative that will help lower our transport costs and the development of the railway is one.

Currently the average transport costs to ferry a ton per kilometer in Kenya and Uganda is US15 cents which is three times as high as the African average.

The size of the rail network --- 1,300km from Mombasa to Nairobi and the dilapidated state in which the new concessionaires found the network and rolling stock will make one of the biggest investment in the region. Already a fully financed $287m turn around program is in progress that started in 2010.

When the British conceptualised the Uganda railway their initial thinking was that it would help in protecting the source of the Nile from its enemies. Uganda was the missing link in their strategy to control the Nile seeing as Egypt and Sudan were already colonies.

Subsequently the railway led to the speedy occupation of Kenya – more specifically the rift valley by white settlers and also made Uganda a viable economy through the export of cotton and coffee.
Citadel Capital have a long term vision to make it the beginning of an intercontinental railway network.

"The strategic importance of this railway has only been squandered by our post-colonial governments.It is a unique investment – an inter-country, Public Private Partnership, Foreign Direct Investment (FDI),an intricate  endeavour which for the time being seems to have the right partners...
As for competition from the widely hyped standard gauge railway? 

"By the time the standard gauge railway is commissioned our business will be mature enough to compete favorably," Citadel Capital's managing director Karim Sadek said.

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