Egyptians set to join RVR board

Egyptian investors, Citadel Capital, who have been angling to gain a foothold in the Rift Valley Railways (RVR), were given a lifeline on Monday when the government ordered all RVR shareholders to migrate into a new company.

After a meeting of the Joint Railway Commission, which brings together the governments of Kenya and Uganda, the shareholders were given 14 days to sort out their differences and join the Kenya Uganda Railway Holdings Limited (KURH). The company, owned by the two governments, will have a Ugandan shareholder with a 15 per cent stake.

“All shareholders are expected to join KURH where the proportion of shareholding will depend on their funding,” Dr Cyrus Njiru, commission co-chairman and Kenya’s Transport Permanent Secretary said after the meeting in Nairobi. And there is little room to wriggle out.

“We will not allow anyone to drag us behind because the concession is based on the indulgence of the two governments; all the necessary notices were issued to cancel it,” Dr Njiru said in reference to past plans to cancel the deal after shareholders failed to raise the requisite funds.

This means the shareholders — Sheltam (35 per cent), Transcentury Ltd (20 per cent), Prime Fuels Kenya (15 per cent), Babcock Brown (10 per cent), Centum Investments (10 per cent) and Mirambo Holdings (10 per cent) — have to sign an agreement they were supposed to sign on November 25, 2009, before some declined.

Lead investor

Although the setting up of the new firm was predicated on Transcentury becoming lead investor, it gives the Egyptians, who have acquired a 49 per cent stake in Sheltam Rail Company, room to join the RVR board. They can achieve this by backing Sheltam’s shareholding in KURH.

Sheltam, which is the lead investor in the 25-year concession and holds a 35 per cent stake in RVR, ran into financial and management challenges, leading to the start of the negotiations to change the shareholding structure in 2007.