Is it do or die for Rift Valley Railways?


(Posted 13th February 2017)

The joint concessionaire for both the Kenya and Uganda narrow gauge railway system, Rift Valley Railways, has come under renewed pressure over allegedly unpaid concession fees.
It was learned from sources in Nairobi that as a result Kenya Railways served the company with a formal notice of intent to cancel the agreement should payment not be forthcoming.
Sources in Kampala were tightlipped however if RVR owed Uganda Railways payments, though there is speculation that the state of flux at the company’s ownership panel has not been helpful.
Qualaa, an Egyptian company and the main investor in RVR, was said to be rattled and deeply unhappy over emerging reports of alleged financial improprieties by former and present staff, in part to do with the procurement of engines. Qalaa has subsequently sought to sell their full or part stake in Rift Valley Railways, to reduce their exposure.
Regular railway sources now speak of a monumentally wasted opportunity by the company to ramp up operations in preparations of the mid year launch of the new standard gauge railway from the port of Mombasa to Nairobi while still holding the rail monopoly on the route from Nairobi to the Ugandan border and the capital Kampala – besides the branch line to the northern Ugandan town of Gulu.
The outstanding concession fees for 2016, due to be paid quarterly. have reportedly risen to some 600 million Kenya Shillings, and a suspected similar amount for Uganda. If not cleared on the double will Kenya Railways according to information at hand cancel the concession, which has previously been in trouble too before Qalaa’s legal predecessor Citadel Holdings, stepped in with a massive cash injection.
For now is a 30 day notice period running and the outcome is wide open as Qalaa is pondering if to inject more money to rescue the company, find a new investor or otherwise let the company go into free fall should the concession be cancelled.


One response to this post.

  1. […] Kenya Railways, shaken by the refusal of their Ugandan colleagues at Uganda Railways to join in terminating the Rift Valley Railways concession, has given the clearest indication yet that they will not immediately proceed with executing the termination, in part caused by a Kenyan court giving RVR at least 30 days protection. Kenya Railways was reportedly rattled when Uganda Railways openly disagreed with them after a termination letter was served on RVR, after in bilateral talks already being told that the Ugandan side would seek other alternatives to help RVR reach concession compliance territory again. It is disputed if a unilateral termination does even hold legal water and could tie up Kenya Railways for years in the notoriously slow courts of Kenya. Hence has the company now signalled they will hold back any action for three months, giving major RVR shareholder Qualaa Holdings from Egypt the time to complete discussions over the acquisition of their holdings by an American investment firm. Kenya Railways stood accused trying to scuttle this deal when it unilaterally served the termination letter, lending yet more credibility to claims that the entire affair is politically motivated to get a potential rival for rail transport out of the way before SGR operations start by mid year. This will also give RVR the option to claim for compensation over loss of business which is enshrined in the concession deal. Links to previous articles relevant to this latest development are shown below. […]


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