Government cancels Rift Valley Railways deal

Saturday October 07 2017

KAMPALA. The government has terminated the Rift Valley Railways (RVR) concession for running Uganda’s metre gauge railway and has also instructed the company to immediately hand over all property.

The railway was constructed by the British colonial administration.
Finance minister Matia Kasaija in a Thursday letter copied to, among others, Attorney General William Byaruhanga, Solicitor General Francis Atoke and Works minister Monica Azuba, said RVR had failed “to remedy the events of default” within the period specified in several reminders that had been issued to them over the last months.

“RVR is instructed to hand back the conceded assets, including, without limitations, all updated data, files and software (or part thereof relating to the conceded assets) to the Uganda Railway Corporation immediately and provide a handover report,” the letter reads in part.
Mr Kasaija demanded that RVR’s guarantor, UAP Insurance, pays URC $3m (about Shs10.6b) as performance bond due. A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.
Mr Kasaija further instructed RVR to “ensure that all concession fees arrears and any other dues due to government/URC are settled not later than 30 days from the date of this termination letter.”
RVR, the Uganda-Kenya railway concessionaire owned by Cairo-based Qalaa Holdings, has had a fair share of problems, mostly financial and managerial, in the recent past, which prompted the government to consider terminating the concession, which was originally set to run until 2030.
In the termination letter, Mr Kasaija said RVR had failed, among other things, to hit the agreed freight volume targets which were even revised downwards in 2014.

He also said they had failed to submit quarterly and annual external audit reports as well as failing to rehabilitate and operate the Pakwach line.
Sunday Monitor has learnt that RVR is in court with the government for arbitration over cancellation of their concession.

The case came up for hearing in August and was adjourned to October 16.
RVR officials were not readily available for comment on the matter, but the company has in the previous months been desperately trying to salvage the concession by bringing on board a strategic investor but the efforts have not borne any fruits.