Kenya and Uganda tell RVR to inject $40m into railway by month-end

He added: “After they have put in more money by Monday, another meeting will be held on Wednesday between technocrats before a meeting of the relevant sector ministers is conducted. It is the ministers who will take the final decision.”

The minister told The East African that stringent performance conditions would be imposed on RVR soon after the current negotiations are concluded.

At the close of last month, officials from Kampala had told The EastAfrican that they would demand from RVR a change of management and a commitment of funding from the concessionaire’s financiers to maintain the contract.

Kenya and Uganda have also been holding discussions with other international railway management firms — Toll Holdings Ltd, which includes UK-based equity fund PME Africa Infrastructure Opportunities, and another consortium led by Optima Management Ltd of the UK.

For the past few weeks, RVR has been engaged in talks with its KFW and IFC financiers, who expressed reservations on Toll Holdings’ experience in Africa.

Toll Holdings has proposed injecting about $10 million into the railway, a figure considered insufficient by the lenders.

With regard to the proposal by Optima, IFC is said to have indicated that it was impressed by the proposal by the company to come up with a management team that will mix local experience and international rail expertise, as well as by the fact that some partners have a long-established presence in Kenya.

Consequently, IFC has asked the shareholders of RVR to come up with a transparent process of selecting between the Toll consortium and Optima.

RVR-Uganda’s failure to perform to the required standards, however, comes as no surprise, according to a number of Members of Parliament who sit on the Parliamentary Committee on the National Economy. They claim that no due diligence was done on the concessionaire.

Initially, the committee had even rejected the government’s request to approve the partial risk guarantee (PRG) required by RVR to access foreign funding.

The ruling National Resistance Movement caucus also censured Privatisation Minister Lukia Chekamondo when she failed to explain the need for the $15 million partial risk guarantee for Rift Valley Railways, leading to a standoff until President Yoweri Museveni intervened.

However, after intense haggling between government officials and ruling party Members of Parliament, the PRG was approved but only after the committee chairman, MP Lubega Kaddunabi — considered the most influential critic of the entire arrangement — was sent on a foreign trip.

The meeting that approved the PRG was instead chaired by MP David Bahati, who doubles as the ruling party treasurer.

RVR’s reputation worsened when the Uganda Railways Corporation accused it of running down public assets and properties under its management.

URC chief executive officer Emmanuel Lyamulemye particularly singled out the misuse of railway wagons.