RVR crip­pled by mas­sive debt, van­dalised as­sets, le­gal hur­dles and em­ployee strikes

The East African - - NEWS - By JULIUS BARIGABA The Eastafrican

Rift Val­ley Rail­ways is still hold­ing onto its con­ces­sion in Uganda, thanks to a court in­junc­tion.

Rift Val­ley Rail­ways is still hold­ing onto its con­ces­sion in Uganda after it went to court a day be­fore its no­tice of ter­mi­na­tion was to ex­pire and got an in­junc­tion against the gov­ern­ment, seek­ing to be al­lowed to rene­go­ti­ate the deal.

The trou­bled con­ces­sion­aire was serv­ing the no­tice of ter­mi­na­tion, which was sup­posed to ex­pire on Septem­ber 5, but they went to court on Septem­ber 4 and ob­tained an in­junc­tion that has been ex­tended twice till Novem­ber 23.

The Eastafrican has learnt that RVR is deep in debt and strug­gling to run the busi­ness. It has racked up two months’ salary ar­rears for its work­ers; its as­sets and track are be­ing van­dalised; and it can­not af­ford to fuel its lo­co­mo­tives.

This sit­u­a­tion has paral­ysed rail oper­a­tions and left clients’ cargo stranded along the route.

Con­ces­sion fees

“I do not even know why they went to court,” said Victor Bye­maro, the na­tional gen­eral sec­re­tary of Uganda Rail­ways Work­ers Union. “They can’t buy fuel, can’t ser­vice the lo­co­mo­tives, and can’t main­tain the line. For more than a month it has been like this. There is no busi­ness and cargo is not com­ing in.”

RVR’S as­sets have been van­dalised, par­tic­u­larly the track be­tween Ka­wolo and Na­manve near Kam­pala, leav­ing cargo stuck in those places.

Among the ma­jor clients of RVR West­ern are lo­gis­tics firm Spedag In­ter­freight, fuel com­pany To­tal, Hima Ce­ment, Roof­ings Ltd and Muk­wano, with vol­umes of cargo stuck at var­i­ous places for weeks.

“We have had a lot of cargo [stranded] for weeks. I can­not go into de­tails now, but it is a lot,” said Mil­ton Kan­dole, the re­gional man­ager of rail ser­vices at Spedag.

Sources told The Eastafrican that RVR has a $3 mil­lion per­for­mance bond that was ex­e­cuted with UAP In­surance, guar­an­tee­ing RVR’S ca­pac­ity to com­plete the 25-year con­ces­sion it won in 2006 to jointly op­er­ate the Kenya and Uganda rail­way ser­vices.

The owner of the rail as­sets, Uganda Rail­ways Corporation (URC), is owed con­ces­sion fees amount­ing to $15 mil­lion, sources said.

Fi­nance Min­is­ter Ma­tia Ka­saija called in the per­for­mance bond on Oc­to­ber 4 when he wrote to RVR to for­mally can­cel the con­ces­sion and de­manded that the com­pany set­tle all fees due to the gov­ern­ment within 30 days.

Mr Ka­saija also told RVR to im­me­di­ately hand the con­ceded as­sets back to URC with a re­port de­tail­ing all data, files and soft­ware, to com­plete the tran­si­tion.

Death knell

“There is no tran­si­tion be­cause of the court process. But we think we can sort this out, ei­ther ad­min­is­tra­tively or legally,” said Charles Kateba, URC’S man­ag­ing di­rec­tor.

In ad­di­tion, URC was set to meet with RVR of­fi­cials on Septem­ber 6, to kick-start the tran­si­tion and even­tu­ally URC to take over the reins of the Ugan­dan leg of the 106-yearold rail­way line, a process that was ex­pected to en­sure re­sump­tion of nor­mal rail oper­a­tions.

Since a Kenya court sounded the death knell for RVR in Au­gust, the Ugan­dan part of the con­ces­sion was thrown into dis­ar­ray and at best re­mained dys­func­tional, with no bank ac­counts to draw money from to keep the ser­vice op­er­a­tional. Then followed a strike that paral­ysed oper­a­tions for weeks as work­ers downed their tools de­mand­ing to be paid their salaries.

Even when the work­ers re­sumed work, oper­a­tions re­mained prob­lem­atic as the bank ac­counts of the head of­fice in Nairobi had been frozen fol­low­ing the ter­mi­na­tion of the con­tract in Kenya.

Ef­forts to reach RVR Uganda gen­eral man­ager Jo­ram Nyanzi were un­suc­cess­ful as he was re­port­edly out of of­fice.

At the time RVR Uganda went to court, Kenya Rail­ways Corporation was get­ting ready to link up with URC to re­sume co-or­di­na­tion and man­age oper­a­tions be­tween the two coun­tries, but the court process halted this ef­fort.

Pic­ture: File

One of the lo­co­mo­tives pro­cured at $21.2 mil­lion by Rift Val­ley Rail­way in 2014 after the com­pany won the rail con­ces­sion.

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