Railways group plans Sh8.5bn upgrade

Rift Valley Railways plans to spend $100 million (about Sh8.5 billion) this year, some of which will be used to add 1,400 wagons to the existing fleet.

The Kenya-Uganda railway concessionaire announced the planned capital expenditure last week, alongside a Sh6 billion loan from its financiers that will be used to upgrade the railway infrastructure.

“Total capex spending this year will exceed $100 million. We have so far invested $120 million in revitalising the railway, surpassing the investment requirement threefold only midway through the investment period,” said RVR’s chief executive officer Darlan De David.

In May, Kenya and Uganda issued fresh terms to RVR requiring the railway operator to increase cargo haulage and invest more in upgrade of the existing Kenya-Uganda line.

RVR is expected to meet the states’ demands in a period of nine months, up to February next year.

NOT MET EXPECTATIONS

The fresh terms, according to a joint communiqué from both governments, were adopted because RVR “has not met the expectations”.

“While the performance trend since April 1 has improved, the same has not met the expectations of both governments,” read the joint communiqué.

The states also directed that Kenya Railways and Uganda Railways initiate monitoring of RVR on quarterly basis to track its progress towards meeting the set targets.

Under the new terms, the firm is expected to increase cargo haulage to above 1.6 million tonnes.

Two months ago, RVR entered into a partnership with Vivo Energy for transport of the oil marketer’s diesel products from Mombasa to Nairobi, a deal which is meant to increase its cargo haulage volumes. Mr David said the firm is in talks with other oil marketers for similar partnerships that are hoped to extend to Uganda.

The company is set to purchase 20 trains this year from US conglomerate General Electric while an additional 10 will be rehabilitated at the firm’s workshops.