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.
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.
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.
Filed under: News | Tagged: centum, concession, kenya, kenya government, Kisumu, mirambo, nairobi, ODM, primefuels, puffet, rift valley railway, roy, rvr, sheltam, transcentury, transport, Uganda, world bank |