RVR to inject Sh2b in troubled firm

August 7, 2008

, NAIROBI August 7 – Players in the railway industry from Kenya and Uganda have resolved that the Rift Valley Railways should submit a comprehensive investment plan to the two governments by August 15.

Speaking Wednesday after a meeting that brought together international financiers and players in the transport industry, Prime Minister Raila Odinga said the stakeholders resolved that shareholders in the concessionaire would be required to inject a fresh capital of not less than Sh2.6 billion between August 31 and October 31.

“It has become very clear that the concession is not working and is causing harm to the economies of Uganda, Rwanda, Burundi DRC and Sudan,” said Odinga.

“This situation is completely untenable and unacceptable to the two governments and therefore a quick solution ought to be found.”

Odinga said the previous concessionaire that allowed the lead company to own 35 percent stake in the railway transport had been scrapped to allow other shareholders a chance to invest more in the industry.

Similarly, the PM said the five-year period given to the lead investor to maintain a 35 percent shareholding would be reduced to the current time and clear timelines to be set for the implementation of the agreed measures.

The PM noted that all aspects of the concession agreement would be reviewed including removing any limitations prohibiting the construction of a parallel railway line.

“The two governments will be at liberty to proceed and undertake a feasibility study for the construction of a new line,” he said.

Concerning the change in the management, the PM said both governments did welcome the new team in the management of RVR and hope to achieve good results within 90 days.

However, the PM said the new capital would be committed to the capital expenditure noting that the resolutions would not act as a waiver of the rights of the parties under the concession

He said that the stakeholders had agreed that additional funds that may be required under the investment plan would be provided by PME Africa Infrastructure Opportunities Plc (PME).

He revealed that KFW and International Finance Corporation (IFC) have pledged to advance the remainder of the funds in due course.

Other stakeholders present included the Bobcock &Brown Ltd, Prime Fuels, KFW Germany, Centum Capital, Auros Capital, Prime Capital and Tran’s century.

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