Kenya Railways, RVR in assets deadlock ahead of handover

Kenya Railways and Rift Valley Railways (RVR) are locked in a transition deadlock as officials disagree on the list of assets and liabilities ahead of the August 31 deadline for ending the railway concession.
Investigations by the Business Daily alludes to a fortnight of long daggers as arm-twisting trade-offs cloud handover plans with Kenyan officials threatening to go back to court “to force RVR to accept its full list of liabilities”.

The Kenya Railways officials, speaking on condition of anonymity, said the RVR has been putting pressure on them to accept a list of assets, which were acquired outside the concession deal. They, however, declined to provide the list of disputed assets. On July 31, the High Court gave the two agencies up to Thursday next week to complete the process of handing back assets and liabilities to Kenya government following the half-way termination of the 25-year concession.

Sources said the KR officials have been groping in the dark ahead of the August 31 deadline because the Ministry of Transport was yet to issue an official communication to that effect.

“We do not know what happens after August 31. We are waiting for communication from our parent ministry regarding the matter,” said a senior official at KR.

Apart from assets said to have been acquired outside the concession agreement, the KR officials are adamant that rent and concession fees owed to the parastatal must be paid in full “or we take them to court over that”. The RVR owes Kenya Railways about Sh7 billion according to insiders who said they would sue RVR if it fails to pay up by the end of the concession period.

The fate of its other debts, amounting to more than Sh16 billion, also hangs in the balance after the Treasury and KR disowned them. Treasury secretary Henry Rotich said the government never guaranteed the loan.

In an earlier interview with the Business Daily, KR managing director Atanas Maina said the parastatal would not inherit the loans even as it takes back the business which was meant to generate the repayment revenue.

READ: What Kenya has learnt from the collapsed RVR rail deal

“These were debts to the company and hence the RVR remains liable for them,” he said.

The African Development Bank (AfDB) tops the list of lenders having advanced the RVR Sh4 billion, the German Development Agency (Sh3.2 billion) and World Bank’s private sector lending arm, the International Finance Corporation (Sh2.2 billion).

Indian railway parts trader Gazebo Industries has already sued the RVR for Sh67 million over a traction motors supply deal.

The RVR operates Syokimau, Umoja-Ruiru and Kikuyu passenger trains. The responsibility to provide the service reverts to the KR after August 31.

According to the KR, the firm would only hand over assets that are included in the concession agreement while they will decide on what to do with those they acquired outside the terms of engagement.

RVR invested in a number wagons and locomotives as they sought to meet boost their business in the region. In 2014, the RVR purchased 20 new locomotives and they have so far acquired more than 120 wagons in their existing assets.

The RVR won a 25-year contract to run the 2,352km Kenya-Uganda railway in November 2006 for the cargo business and a five-year contract for the passenger unit.

The RVR has been under pressure from the governments of Kenya and Uganda to improve services.

The two governments maintained that the RVR had failed to live up to expectations nine years since it won the concession leading to the firm and the Kenya Railways finally agreeing to end the concession contract early this month.

The concession with Uganda is coming to an end early next month.

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