Rift Valley Railways unveils Sh13bn recovery plan

Rift Valley Railways executive chairman Brown Ondego addresses a media briefing on Wednesday where he outlined the company’s five year strategic plan. At left is Mr Charles Mbire, a board member of the company. Photo/HEZRON NJOROGE

The troubled Rift Valley Railways will be investing Sh13.3 billion ($206 million) over the next five years as part of its restructuring.

The amount is far much higher than the Sh1.6 billion that it had promised to pump in the same period when it was handed over the concession.

According to Mr Brown Ondego, the executive chairman of RVR, the budgeted funds for the investment plan will be sourced through a mix of current shareholder reserves, equity, shareholders funds and debts.

“The initial amount that was to be put in was very little and could not achieve much. With the new figures, we hope to transform the firm into a more reliable and efficient rail operator in the region,” said Mr Ondego

Since taking over the Kenya-Uganda railway as the concessionaire, RVR has met several challenges in a bid to offer its services. Following the stagnation of operations at the firm, Kenya and Uganda had issued a raft of conditions to be met by the firm or face review of the concession.

Part of the conditions was that the firm was to present a detail investment plan, on which Mr Ondego was briefing the media on.

“We are in a dire status and we are committed to meeting the plan we presented in the next five years. It however requires that we get our financial acts in order,” said the chairman.

RVR shareholders are currently undertaking a rights issue that is expected to bolster its financial base. The issue, ending at the end of September, is expected to raise about Sh670 million. The money will be used to service creditors who are overdue.

New shareholders in the cash strapped firm have also indicated that they will be taking up equity amounting to Sh3.9 billion by the end of next month. The firm also hopes to get capital investments from the International Finance Corporation and the German Development Bank, subject to meeting several conditions.

The two agencies are supposed to inject a total of Sh3.5 billion. Speaking to the press at the firms’ headquarters in Nairobi, Mr Ondego also noted that the reforms would be a three-phased program. This would raise their infrastructure and operations level.

The first phase of the plan will focus on the improvement of the rail infrastructure on the Mombasa-Nairobi-Kampala main line. This will also involve refurbishing of the 93/94 class locomotives to improve reliability.

The firm would also in the first and second years of the plan focus on the staff development and increase the average locomotive speed from the current 16 kilometers per hour to 50 kilometers per hour.

“The engineering survey indicates that the railway can be brought back to satisfactory operating standards with focus on safety issues and on the implementation of track upgrading programmes,” said Mr Ondego.