Engineering News

Rift Valley Railways (RVR) was to spend $287-million over the next three years on the refurbishment of the railway system between Mombasa, in Kenya, and Kampala, in Uganda, said RVR executive vice chairperson Brown Ondego on Tuesday.

Speaking in Johannesburg at AfricaRail 2013, he noted that the private consortium had already spent $45-million on renewing the East African rail system, which was more than 100 years old.

Part of the RVR capital expenditure would be used to refurbish locomotives, while the 1 331 km railway line would also receive 70 km of new track.

Speaking to Engineering News Online on the sidelines of the conference, Ondego said the system was currently only working at 10% of its eight-million-ton to ten-million ton-a-year capacity.

RVR was hopeful that the next three years’ capital injection would see the system operate at 40% of its capacity, at around four-million tons a year, which would return it to levels last seen in 1972.

Around 96% of RVR’s business was cargo (40% containers, 20% liquid bulk, 15% grains) and around 4% passengers.

Containers were responsible for around 60% of RVR’s revenue.

RVR is made up of Egyptian shareholding (51%), as well as Kenyan (34%) and Ugandan (15%) shareholding.

Ondego said he was “very happy” with the RVR concession, which kicked off in 2008, but did question the current fee structure.

He said RVR was paying 11.1% of its topline revenue to government structures, while also paying a fuel subsidy – effectively subsidising the rail system’s road competitors.

He believed it was necessary for RVR to “have discussions with government” on how it could restructure this deal so the railway system could better serve the East African economy.

“We must have an incentive to invest.”