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RVR back in court to reclaim its Uganda business

Monday February 19 2018
RVR

A Rift Valley Railways locomotive during rosier days. RVR which has been running the Uganda Railway concession, has protested what it describes as an “illegal takeover” of its operations by the Uganda Railways Corporation. FILE PHOTO | NATION

By JULIUS BARIGABA

Rift Valley Railways, which has been running the Uganda Railway concession, has again protested what it describes as an “illegal takeover” of its operations by the Uganda Railways Corporation.

In a strongly worded statement in the local media on February 8, RVR made reference to the media statement by Uganda Railways Corporation (URC), dated January 25, 2018, addressed to the stakeholders of the railway business in Uganda, saying,

“We hereby put URC on legal notice and warning” that RVR had not repudiated its obligations nor its rights under the terms of the Uganda Concession Agreement.

“RVRU is the only legal entity permitted to operate railway business inside the Republic of Uganda according to the concession agreement signed between the Government of Uganda and Rift Valley Railways.

“The Government has not terminated the Uganda Concession Agreement after its decision on the 22nd of November 2017 to withdraw the June 4th 2017 Notice of Termination. This withdrawal had been shared with all stakeholders and remains the status quo,” RVR said.

But Ministry of Finance spokesman Jim Mugunga said the statement was “their opinion” and that RVR has a right to exercise.

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The RVR statement was a follow-up of a letter written days earlier by the firm’s lawyers MMAKS Advocates to the Minister of Finance, and copied to the Attorney General and the managing director of the URC warning of legal repercussions over the manner in the concessionaire was kicked out.

The Attorney-General on February 15 filed his response, dismissing RVR’s claims to being the legal operator of rail business in Uganda, and justifying the January 25 takeover.

Notice of termination

The government issued a notice of termination on June 4, 2017, effectively to end RVR’s 25-year concession to operate rail services in the country.

On September 4, while URC was preparing to receive the conceded assets to start the transition, RVR shareholders Qalaa Holdings of Egypt and Ugandan firm Bomi Holdings went to court seeking arbitration, arguing that the firm had been unfairly treated.

Accordingly, RVR sought and obtained an injunction against its deal being terminated, which was extended several times till November 22, 2017.

But with the business in Kenya legally and formally terminated, the Uganda section struggled to keep operations running; the Kenya RVR head office controlled the revenues and bank accounts, but upon winding up, it left the Uganda operation in the lurch, with all services grinding to a halt.

On January 29, URC ran its first freight train and has averaged three per day, but Mr Kateeba says passenger trains are still on hold because “we have not been able to absorb staff for passenger trains.”

Indeed, staffing is one of the issues on which RVR faults the government takeover, stating: “URC does not possess the manpower, nor the requisite rolling stock (specifically mainline locomotives) to offer freight services, not to mention that it has not run a single train since 2006.”

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