RVR boss Carlos Andrade (left) with Transport minister Michael Kamau (right) and PS Nduva Muli. PHOTO | LABAN WALLOGA
What you need to know:
The syndicated loan will fund 80 per cent of the Sh2.2 billion total cost of the locomotives, with RVR funding the balance.
The RVR is betting on infrastructure upgrade and fleet expansion to move to profitability after posting losses since the start of the concession.
The first three of the 20 GE locomotives arrived in Mombasa on Tuesday and the remaining units are expected to have been delivered by April next year.
Rift Valley Railways (RVR) has taken a Sh1.82 billion loan from CfC Stanbic and its South African parent company, Standard Bank, to finance the purchase of 20 locomotives from US conglomerate General Electric.
The syndicated loan will fund 80 per cent of the Sh2.2 billion total cost of the locomotives, with RVR funding the balance.
This is the first purchase of locomotives since 1987, marking an important milestone for RVR which was in 2006 awarded a 25-year exclusive contract to run the Mombasa-Kampala railway line and Nairobi commuter services.
“Insufficient locomotive power is the single biggest obstacle preventing a step change in the amount of volumes we transport”, said RVR’s new chief executive officer Carlos Andrade.
RVR took over management of the railway line from the state-owned Kenya and Uganda Railways, which made minimal investments in terms of purchase of locomotives and general infrastructure upgrade.
A consortium of investors led by Qalaa Holdings, an Egyptian investment firm which owns majority shares of RVR, and minority Ugandan shareholder Bomi Holdings, is expected to raise the Sh400 million balance.
“This new financing not only clears this bottleneck but is also a vote of confidence by a major international lender in our operations as it is premised on revenues to be generated by the trains,” added Mr Andrade.
The regional head of Standard Bank’s power and infrastructure financing operations Kwame Parker said the credit is an expression of the lender’s confidence in RVR’s financial performance going forward.
The RVR is betting on infrastructure upgrade and fleet expansion to move to profitability after posting losses since the start of the concession.
The first three of the 20 GE locomotives arrived in Mombasa on Tuesday and the remaining units are expected to have been delivered by April next year.
The railway operator says their addition to the locomotives currently being rehabilitated will double the company’s operating fleet to 2,400, expanding its capacity to haul freight on the Kenya-Uganda line.
RVR is betting on completion of a multi-billion-shilling investment in rehabilitation of the Kenya-Uganda railway track to boost reliability of its service and reverse its losses.
Neglect of the railway over the decades made the transport option increasingly unreliable, with major delays and frequent derailments pushing more importers and exporters to truckers.
RVR ferried 1.2 million tonnes of cargo last year compared to 1.3 million tonnes in 2012, indicating that truckers continue to gain market share in the local logistics market.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
