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Economy

RVR escapes licence revocation with higher rail cargo volumes

New RVR locomotives in Mombasa.  The rail firm said it has met the terms set by the Kenya and Uganda governments. PHOTO | FILE
New RVR locomotives in Mombasa. The rail firm said it has met the terms set by the Kenya and Uganda governments. PHOTO | FILE 

Rift Valley Railways (RVR) on Tuesday said it had met the terms agreed with the Kenya and Uganda governments in May, that could have led to the cancellation of its licence.

RVR group chief executive Carlos Andrade said in a statement that the rail firm increased its cargo haulage to 1.883 million tonnes against the set target of 1.737 million in the year to March.

Kenya and Uganda gave RVR until February 2 to increase its cargo haulage from 1.2 million tonnes, to invest more cash in the upgrade of the Kenya-Uganda line and purchase new wagons.

RVR said it has spent over Sh13.7 billion ($150 million) since 2012, against a target of Sh3.6 billion ($40 million) and added 34 locomotives to the existing fleet to boost freight volumes.

“We have surpassed the set freight volume targets that the two governments had issued to us,” said Mr Andrade in a statement.

“In the first quarter of 2014, the regulators issued an ultimatum to cancel the concession had the operator not met the new targets,” the statement read.

The Business Daily was unable to verify the RVR performance data with the Transport ministry.

The two governments maintained that RVR had failed to live up to expectations nine years since it won the concession.

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.

But railway transport continued to lose the cargo business share as importers preferred to use roads, underlining the need for its quick revamp.

RVR accounted for 5.4 per cent of the cargo that landed at the Mombasa port in 2013, down from 7.3 per cent a year earlier. The rest of the freight was handled by trucks.

China Road and Bridge Corporation was picked to build a new Sh450 billion railway from Mombasa.

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