New deal in the offing for rail firm
Posted Tuesday, May 22 2012 at 00:00
- Concessionaires now plan to restructure the dismally performing passenger sector of the agreement when it comes to an end in June this year
The concessionaire partners in Rift Valley Railways intend to restructure the poorly performing passenger service as part of the deal whose term comes to a close on 30 June.
According to sources familiar with the matter, passenger services will be unbundled to constitute the Nairobi commuter service, the Syokimau circuit, and long distance inter-city service.
“Kenya Railways, as the regulator, is taking stock and proposals. The partners are expected to provide a new concession with operation and management under new terms,” said a source not allowed to speak to press.
Rift Valley Railways (RVR) Consortium managing chairman Brown Ondego early this year complained that the passenger part of the concessionare, which stretched for five years, was not performing well since passengers were seasonal on long distances.
“The movement of passengers over long distance has remained low. The two concessionaire partners will have to decide the way forward,” he said.
Almost empty trains
He said trains from Mombasa to Kisumu were almost empty, while the route to Mombasa attracted only seasonal holiday-makers, with no much business most of the time.
Mr Odengo, however, promised to move more cargo through the system in two years, once upgrades being undertaken with the $164 million funding secured in August last year take effect.
“In the next 24 months, we shall have a different story to tell. We shall have significant improvement in the amount of cargo that is moved by railway. This is the time we expect to turn off cargo from our roads,” said Mr Ondego.
Kenya Railways says it is satisfied with the pace of rehabilitation on the line. It says RVR has a funding commitment of $300 million that will see it upgrade the railway system in five to seven years.
“What we are dealing with is huge backlog due to lack of investment and deferred maintenance. The impact of this investment is not going to be overnight because there are significant lead times in procurement as materials are custom made. Locomotives have a lead time of two years from the time of placing an order,” said Kenya Railways managing director Nduva Muli.
He said in 2008 the cargo moved through the railway was 1.57 million tonnes, noting that this had marginally increased to 1.6 million tonnes last year.
Mr Muli said they had approved $70 million worth of projects to improve the tracks, signals, and locomotives. In 2010, the railway system carried 5.7 million passengers and in 2011 it carried 6.2 million, with most of these being on commuter service within Nairobi and its outskirts.
Near its capacity
The upgrade in the commuter service in Nairobi is expected to increase the number of passengers to 25 million, according to the regulator.
But the Mombasa port, a key plank in the movement of cargo, is suffering low uptake of cargo, with only 1.7 million tonnes being moved through the railway system compared with 19 million tonnes throughout last year.
Experts say this is near its capacity and other efforts to ease pressure have to be on schedule to avert congestion in the medium term.
Mr Ondego said the concessionaire would use $23 million to repair the railway system over the next one year.