Companies

Cabinet nominee puts Rift Valley Railways on notice

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Mr Michael Kamau greets President Uhuru Kenyatta at State House, Nairobi, on April 25. FILE

Transport and Infrastructure secretary nominee Michael Kamau has put Rift Valley Railways (RVR) on notice and threatened to review the concession agreement over poor performance of the rail business.

Mr Kamau told the parliamentary committee interviewing Cabinet secretary nominees that the performance of the rail business had failed to live up to expectations of the Kenyan and Ugandan governments seven years since RVR won the concession.

RVR won a 25-year contract to run the 2,352km Kenya-Uganda railway in November 2006 on the cargo business and a five year contract for the passenger unit whose tenure was extended by months in 2008.

“We have had a seven-year concession, and since it started cargo transported by rail has gone down from 15 per cent to three per cent, we will look at the concession again and see whether it is working,” said Mr Kamau.

“Today you can actually shut down rail transport and the economy will still function,” said Mr Kamau, who has been the Roads permanent secretary for the past five years.

The government can terminate the concession agreement if RVR fails to meet terms of the pact, including performance and fees payments.

On the passenger business, the government has opted to offer the rail firm shorter one-year contracts, which gives the State a window to consider new operators should it be dissatisfied with RVR, said a senior official at the Transport ministry.

Kenya’s passenger rail services have not recorded any significant improvement. Official statistics show that the total kilometres covered by the operator dropped from 389 million in 2009 to 365 million kilometres last year.

Performance in the cargo business has also not been impressive with the volume transported from Mombasa port growing only marginally from 1,060 million tonnes in 2009 to 1,135 million tonnes last year.

This is despite the cost benefits transporters stand to gain moving cargo by rail. The Kenya Railways Corporation, which oversees the concession on behalf the government, appears not satisfied with RVR’s progress.

The corporation says the number of wagons available to RVR has dropped to less than 1,000 compared to 3,200 when the concession was awarded. It links the congestion of the Mombasa-Nairobi Road to the decline in performance of the railway.

Despite the massive potential that rail transport has for improving the region’s economy, it has always played second fiddle to roads in both cargo and passenger transport.

In the last financial year trains hauled about 1.6 million metric tonnes of cargo originating from Mombasa port estimated at about 20 million metric tonnes per annum.

The rest of the freight was handled by trucks, which Mr Kamau blamed for the destruction of roads. RVR was expected to overhaul the dilapidated metre gauge track, the first such major investment 20 years, repair wagons, and overhaul locomotives after a receiving a Sh13.9 billion ($164 million) debt.

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