RVR has cited dilapidated infrastructure as one of its major burdens since winning the concession. FILE
By LEE MWITI
Three years after South Africa’s Sheltam Rail
was kicked out of the Rift Valley Railways (RVR) consortium that had won
the Kenya-Uganda rail concession, it could be déjà vu all over again as
the current operator of the rail line spiritedly fends off renewed
official criticism of its performance.
The concession has in recent weeks taken a sustained bashing from top government officials over what Nairobi and Uganda feel is its underperformance, a charge stridently denied by RVR.
The apparent chill in relations has its roots in the troubled history of the concession. Sheltam in 2006 edged out the Indian-fronted Magadi Soda consortium for the rail concession but it then rapidly became clear that it had taken many for a ride, as it struggled to stump up equity that would have reassured financiers that it was a viable operator.
Sheltam’s other big failing was basic: despite a meticulously packaged brownfield bid that was even named as Euromoney Project Finance magazine‘s Africa Deal of the Year in 2007, it had little technical expertise in running a railway, even though it shared a parent firm with Comazar, the biggest private railway operator in Africa.
Given the inordinately high expectations that Nairobi and Kampala had of a quick turnaround, the Roy Puffet-led concession quickly foundered under pressure, resulting in Sheltam’s eventual exit in 2010 following World Bank-brokered firefighting talks in London.
“They just didn’t know what they were doing,” Mr Brown Ondego, the shoot-from-the-hip executive vice chairman at the restructured RVR, said of Sheltam’s attempt during a recent low-key media roundtable put together to counter the murmurs of discontent around the current concession.
The renegotiated deed of amendment brought in the Egyptian private equity firm Citadel Capital as the majority shareholder following a tussle with the other shareholders, and which also resulted in the politically-connected listed Kenyan investment firm TransCentury increasing its stake from 20 per cent to 34 per cent.
Uganda’s Bomi Holding, with a 15 per cent stake, rounded out the new-look consortium.
But after a détente of sorts in relations since the 2010 restructure, the two governments are again impatiently breathing down RVR’s neck.
There is a sense in RVR’s Nairobi boardroom that the South Africans’ shambolic management of the earlier concession still rankles in Kampala and Nairobi, leading to the straitjacket operating environment the current turnaround is afforded.
Among the first signs that all was not well in government quarters came during the parliamentary vetting of Kenya’s Transport and Infrastructure Cabinet Secretary, Michael Kamau, in May.
Mr Kamau was widely reported as having termed the performance of the rail business as unsatisfactory.
“We have had a seven-year concession, and since it
started, cargo transported by rail has gone down from 15 per cent to
three per cent, we will look at the concession again and see whether it
is working,” said Mr Kamau.
Now the Cabinet Secretary, Mr Kamau was last week again quoted saying that Kenya and Uganda would through a commission review the railway’s performance monthly, an admission of sorts that the oversight role has been relegated to the backburner.
“Both countries express concern over RVR, especially looking at its entire performance. We noted that the cargo handled by RVR has been declining,” Mr Kamau was quoted as saying.
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