It was last month on the 6th October, 2017 that the Government of Uganda terminated the grant for the Rift Valley Railways (RVR), over breach of contract and causing a loss of $784.4m (sh2.824 trillion).
Rift Valley Railways (RVR) is a consortium that was established to manage the parastatal railways of Kenya and Uganda. The consortium won the bid for private management of the century-old Uganda Railway in 2005. The Kenya-Uganda railway had been run by the East African Railways and Harbours Corporation 1948 - 1977. In 2014, RVR moved 1,334 million net tonne kilometers of railway flight, up from 1,185 million net tonne kilometers the previous year.
Conferring to state minister for investment Evelyn Anite, the Uganda Railways Corporation resumed management and operation of the railway services with immediate effect.
Uganda Railways Corporation (URC) is a corporate body reporting to the Ministry of Works and Transport. Under the Uganda Railways Corporation Act (1992). Mandate: Construction, operation and maintenance of railway, marine and road services both in and outside Uganda, for the carriage of passengers and goods. Vision: To provide a modern, safe and sustainably efficient high capacity passenger and freight railway system for both for Uganda and the region.
“There is no more room for negotiations with RVR as they have continually breached the terms of agreement,” she said while reading the termination later signed by finance minister Matia Kasaija, at the URC offices on the 6th of October, 2017.
She said in addition, “RVR has failed to remit $8.5m (sh30.6b) concession fees, performed bellow expectation on the agreed annual flight volume and failed to submit annual audit reports to the government and URC”.
She also said the concessioner also failed to maintain and operate the Pakwach line contrary to the concession agreement and damaged assets conceded from government at the commencement of their concession.
“When they took over, we had 45 wagons in operation, but today we have only 16 left. All they have left behind for us is a big mess which we must now address,” she believed.
The RVR which is 80% owned by Cairo-based Qalaa Holding won the concession to operate the country's 1918km rail network in 2006 in a deal that was meant to span 25 years.
The journey to termination picked pace in mid-March when Kenyan officials traveled to Kampala for a meeting with their Ugandan counterparts to assess RVR’s performance. Qalaa’s head of transportation division, Karim Sadek, who was expected to attend the meeting, failed to show up, choosing to send a junior officer instead.
“This irritated the officials, considering that RVR had performance issues in Kenya and Uganda, which they were trying to sort out. By the end of the meeting, the officials had passed a resolution to terminate the contract at the end of a 90-day notice,”
Works and transport minister, Monica Ntege said the Government is ready to facilitate revival of the rail system and urged URC to immediately focus on delivery of cargo which is stuck between Mombasa and Malaba.
“Some of these goods are stuck because of lack of fuel for the trains to move and our traders are too stuck,” she said.
She said URC has also to ensure that the central corridor route through Tanzania is opened to provide an alternative and increase competitiveness in cargo transportation.
The URC board chairman, Hannington Karuhanga, said the corporation is taking on an immense job, considering all conceded assets are in bad shape.
“The level of dilapidation of the assets is bad. However, we have managed this organisation before and we shall do it again effectively,” he assured.
How is Railway Management in your own other region of Africa? Do you think it is a good idea to always privatize transport systems of a given country in Africa? If yes, is it true they fail to manage the resources or it is a question of corruption? And if they fail, then why yet at signing such agreements they seem to have the potential?