Rail firm says IMF report on slow cargo growth erroneous

Money Markets

IMF report says that cargo hauled by rail has not grown in spite of reduced transit time. PHOTO | FILE 

By GEORGE NGIGI

Rift Valley Railways has downplayed a report by the International Monetary Fund (IMF) stating cargo hauled by rail has not grown despite reduced transit time.

RVR refuted claims that its relationship with transport firms had deteriorated as asserted by IMF in its poverty reduction progress report on Uganda.

“The condition of the existing metre-gauge rail network has improved under the current concession arrangement, helping to cut the Mombasa-Kampala transit time by more than 30 per cent. This has not significantly increased freight cargo carried by rail however,” said IMF in the report.

It added that delayed investment in rolling stock by RVR had negative impact on its customer relations with transport firms.

RVR said it had increased its rolling stock having already received nine of 20 locomotives ordered from the United States and volumes had risen.

“Volumes transported by rail to Uganda have indeed increased by nine per cent over the past year. Due to the significant investment in rolling stock RVR expects volume growth of between 10 and 20 per cent next year,” said the railway company in an e-mail response to the Business Daily.

It said some of the key drivers of its business include commencing rail transportation of billets for large steel manufacturers such as Roofings Rolling Mills and Uganda Bati. It said this had led to its monthly consignments growing to 9,000 tonnes per month from 3,000 tonnes in May. The company cited increased business from oil distributors Total and Vivo.

RVR pointed out it did not interact with transporters who own and move cargo by truck but rather with freight forwarders and logistic providers.

“RVR’s relationship with major freight forwarders — Spedag Interfreight, Bollore, Kuehne & Nagel — is very strong,” said RVR.

The Kenyan and Ugandan governments have also previously voiced concern over RVR’s performance, arguing that amounts transported were below targets.

RVR won a concession to operate the 2,350km railway line from Mombasa port to Kampala, the capital of landlocked Uganda. The fate of RVR remains unclear following an agreement by Kenya, Uganda and Rwanda to build a standard gauge railway which will be financed by China.

Kenya has however sought to assure investors in RVR that construction of the railway will not impact negatively on their business.

“The protection will be based on volumes RVR will be doing at the time SGR starts operating. Their freight growth projection will also be accommodated based on the preceding three years growth rate.

‘‘So it is actually up to them to increase their volumes so they can enjoy greater protection,” Transport principal secretary Nduva Muli told the Business Daily in a previous interview