Railway deal signed
Posted Thursday, August 26 2010 at 09:15
Finance Minister Syda Bbumba yesterday signed a revised agreement on the running of the Kenya-Uganda Railway, ending months of back-and-forth negotiations.
The agreement ends a bitter continental fight over the network, which pitted Ugandan and Kenyan businessmen jostling with Egyptian investors to replace the South African firm that originally won the 25-year concession over the railway line.
“This has been a prolonged process and any delays have been caused by the need to have a consultative process within government as well as with our counterparts in the Kenyan government,” Jim Mugunga, spokesman for the Privatisation Unit in the Finance Ministry told Daily Monitor yesterday.
Kenyan transport minister Amos Kimunya signed on behalf of the Kenyan government to bring closure to the process. The signing of the concession amendment agreement is set to unlock more than Shs300 billion ($150million) in planned investment into the railway network which is badly in need of new investment and repairs.
The signing also officially recognises Citadel Capital, the Egyptian private equity firm as 51 per cent owner of RVR, the company that owns the concession over the railway.
The other shareholders are Kenya’s TransCentury private equity firm with 34 per cent while businessman Charles Mbiire owns a 15 per cent stake set aside for Ugandan investors.
Citadel had earlier pulled out of signing the agreement after the Tororo-Packwach and Busoga loop had been kept out of the railway concession but sources told this newspaper that the two segments of the railway, which are seen as key components of future growth for the rail network, were included in the final concession agreement.
The revised agreement also introduces a more stringent agreement to monitor the concession and eliminate delays and also mandates the shareholders of RVR to bring in a company with technical expertise to help run the railway network.
Sources familiar with the deal say a South American railway operator has already been identified as the technical partner, pending due-diligence by the two governments.
The International Finance Corporation, the German Development Bank and other lenders are expected to announce planned investments into the railway network, seen as a key component to reducing the cost of transporting goods within the region.