Kenya ends Rift Valley Railways contract

Tuesday August 1 2017

A Rift Valley Railways cargo train passes the standard gauge railway terminus in Mtito Andei. PHOTO | JEFF ANGOTE

A Rift Valley Railways cargo train passes the standard gauge railway terminus in Mtito Andei, Kenya. PHOTO | JEFF ANGOTE 

By NJIRAINI MUCHIRA
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The Rift Valley Railways (RVR) is getting out of Kenya with the government set to take over operations of the 100-year meter gauge rail.

In what is an anti-climax of a much hyped privatisation deal gone terribly wrong, RVR will over the next 30 days hand over all concessioned assets to Kenya Railways (KR), ultimately marking the end of its troubled 11 years of operating the Kenya-Uganda railways.

This comes after a Nairobi high court granted Kenya Railways the order to terminate the 25-year contract due to RVR’s failures to meet conditions under the concession agreement signed in 2006.

“It is hereby ordered by consent that the concession agreement dated January 23, 2006 be and is hereby terminated today July 31, 2017,” said High Court judge Grace Nzioka in her ruling.

The two firms consequently agreed to establish a joint takeover committee that will ensure a seamless handover of operations and conceded assets, said a joint statement signed by Kenya Railways managing director Atanas Maina and RVR chief executive officer Isaiah Okoth.

“KR and RVR will endeavour to ensure there is minimal adverse economic and social impact associated with the transition. We jointly wish to assure the employees, customers and stakeholders of our commitment to ensure smooth transition and continue operations,” said the joint statement.

Uganda

Kenya’s termination of the concession after seven months of court battles is expected to give impetus to Uganda, which is also in the processes of ending the RVR deal.

RVR, which is owned by Cairo-based Qalaa Holdings, has over the years struggled to revive the business, repeatedly failing to meet the concession terms.

When terminating the concession in April, KR said that RVR had defaulted on three key terms of the concession agreement namely maintenance of conceded assets, freight volume target and payment of concession fees.

RVR has desperately been trying to salvage the concession through bringing on board a strategic investor but these efforts have fallen flat.