END OF THE ROAD? Kenya Railways has terminated contract with RVR

Uganda, which has been shy to take Rift Valley Railway (RVR) to court for failure to meet concession terms, will mostly follow Kenya to terminate the 11-year concession the two countries signed in 2006 with  (RVR)to manage the Kenya-Uganda Railways.

Early last week, officials from the finance ministry said they were waiting for developments in Kenya which in March, had lodged a case in a Nairobi court to terminate the contract, arguing that RVR has failed over the years failed to meet its contract obligations.

The Kenyan government, having succeeded in court, is in preparations to take over operations of the 100-year meter gauge. RVR will over the next 30 days hand over all concessioned assets to Kenya Railways (KR), ultimately marking the end of its troubled 11 years of operating the Kenya-Uganda railways.

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The government and RVR have agreed to establish a joint takeover committee that will ensure a seamless handover of operations and conceded assets, said a joint statement signed by Kenya Railways managing director Atanas Maina and RVR Chief Executive Officer Isaiah Okoth.

Kenya’s termination of the concession after seven months of court battles is expected to entice Uganda, which has also tried to end the RVR concession.
RVR, which is owned by Egyptian-based Qalaa Holdings, has over the years struggled to revive the business, repeatedly failing to meet the concession terms.

While terminating the concession in April, KR said that RVR had defaulted on three key terms of the concession agreement namely maintenance of conceded assets, cargo haulage targets and payment of concession fees amounting to KSh600 million.

In Uganda, RVR failed to meet what is termed as the Golden Standards, according to the past two transport sector reviews. RVR has allegedly failed to extend the services beyond its operations in the central to northern Uganda.

Uganda’s Ministry of Works and Transport top officials were unavailable to comment on this development. But transport analysts said Uganda will have to follow Kenya and terminate the RVR contract though at first they had resisted.

RVR has desperately been trying to salvage the concession through bringing on board a strategic investor but these efforts have not raised any equity.