Railways operator cannot move goods

Problems experienced by a World Bank funded railway concessionaire have worsened train services in East Africa, resulting in a pile-up of cargo at the Mombasa Port.

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A train branded with RVR colors. Picture by the Business Daily

Since gaining a concession in 2006 to run the Kenya and Uganda railway system for 25 years, the Rift Valley Railways (RVR) has come under heavy criticism for non-performance. The Kenya Railways Corporation and its Ugandan counterpart both say that RVR is moving less cargo today than when it took over operations two years ago.

On its part, RVR says that the state of infrastructure it inherited was so bad, most of its funds are getting spent on putting trains back on the tracks. “Less than half of the locomotives were running when we took over,” says RVR Managing Director, Roy Puffet, “the rest are only good for scrap.”

In order to reduce accidents on the 100 year old railway system, RVR introduced a 50 kilometer-per-hour speed limit on its trains. Critics say this has slowed down the railway system. Meanwhile, the movement of cargo at the port of Mombasa has literally been crippled. Often, containers and other goods accumulate to the extent where ships cannot discharge additional cargo. Consequently, Kenyan industry is forced to use road transport, which is far more expensive than railway transport.

The use of trucks in transporting cargo on East African roads has contributed to increasing road accident fatalities. It also shortens the lifespan of roads, most of which were not designed to handle 50 tonne trucks. RVR says that it moves just about 10% of the region’s cargo. “That is all that our capacity can handle,” explains Mr Puffet.

Mr Roy Puffet, the RVR boss

Mr Roy Puffet, the RVR boss

Last week, employees of RVR went on strike, further worsening the firm’s situation. The workers were protesting at delayed salary payments and uncertain working conditions. “We have been casuals since 2006,” say the workers.

Meanwhile, RVR has announced that it is bringing into its board two additional shareholders, to shore up the firm’s management. The two are Primefuels Kenya Ltd and Mirambo Holdings of Tanzania. They will join the existing board made up of Sheltam Rail, Transcentury Ltd, Centum Investments and Babcock Brown Investments. Sheltam Rail is a South African railway company while Transcentury and Centum represent Kenya’s ruling elite.

The Rift Valley Railway concession is a World Bank funded venture to improve railway services in East Africa. State-owned Kenya Railways and Uganda Railways had long proved unable to sustain services. Indeed, in a tragic example of the state of Africa, there were less trains running in 2006 than there were in 1963. Due to civil war in the 1970s and 80s, most of Uganda’s railway system lay unused and vandalized. Kenya wasn’t faring any better with vast sections of line closed for lack of locomotives and wagons. Shipping services on Lake Victoria had virtually stopped, resulting in socio-economic decline for the lake ports of Kisumu and Jinja.

Both Kenya Railways and Uganda Railways were insolvent, unable to pay debts without regular financing from respective governments. It was believed that granting a railway concession would help commercialize railway services while raising the funds necessary for reconstruction. As it turns out, decades of neglect and incompetence in the railway system have taken their toll. Indeed, RVR is discovering that it may have bitten more than it could chew.

RVR was affected by political and ethnic clashes in Kenya following disputed elections in December 2007. Sections of railway line were destroyed by supporters of Prime Minister Raila Odinga who was contesting the election of President Mwai Kibaki. RVR has declared that it will not pay concession fees for that period, saying that it spent millions of shillings in repairing the damaged line. RVR cited a clause in the concession contract, which makes allowances for political risks. The Kenyan government is not amused.

The Kenyan and Ugandan authorities have expressed a wish to end the RVR concession and restore operations to Kenya Railways and Uganda Railways. However, with a World Bank contract still in place and expected to run for at least 25 years, both governments would well be advised to cease wishful thinking and take tangible steps to help RVR realize its mission.

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8 Responses

  1. Running a railway is not an easy business. Professionals have to be hired. But where do we get them from? Grand Ideas wont work here – getting practical is the key. I dont know now, but KR really had managers who were off track of the business. The track conditions is poor, Narrow gauge is a BIG problem, then why not install concrete sleepers instead of metal, and signaling systems are obsolete. As a professional in Rail transport, I doubt if 25 yrs will revive the system.

  2. The problem with the RVR is the “experts”exported from S.A.They are the ones letting the MD down,they know nothing about runnig the railways and have totally disregarded the managers inherited fron KR,who know where they went wrong.

  3. In normal business environs Foreigners take time to study and learn the environment they will be operating in before they fully set up shop or even think about facing out the old management.
    All that RVR has perfected is Retrenchment and this is impacting negatively on the new management.
    Its time to Re-think your strategy!

  4. Problems with RVR start with staff motivation. Just look at their salary structure for Kenya and one will understand what I mean.

    – Top management constisting of about 25 people (2 Kenyans the rest are South Africans ) Monthly salary bill = Ksh 35 M
    – Middle management constisting of about 25 people (All Kenyans ) Monthly salary bill = Ksh 3 M
    – The rest constisting of about 2500 people (all
    Kenyans ) Monthly salary bill = Ksh 70 M

    By all standards, this is not fair to Kenyans at all.

    James.

  5. The other problem with RVR’s management is that their staff policies are meant to favour the so called “Experts” from S.A. To the experts Kenyan’s are like their slaves. The Kenyans earn peanuts and yet they are the ones who do the donkey work.

  6. RVR’s salary hierachy

    Dept Boss (from S.A) – Monthly salary approx. Kshs 2M

    then

    assitant to the boss (Kenyan) – Monthly salary approx. Kshs 200K

    then

    ordinary worker (Kenyan) – Monthly salary approx. Kshs 50K or less

    This is total madness.

  7. RVR is one company that only knows how to punish mistakes but doesn’t know how to reward good work from its worker.

  8. I wonder what the experts from S.A. came to do. Kenyans can do better than them by far, I’m sorry to say.

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