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RVR exit sends Egyptian firm into Sh16bn loss

Locomotive engines at an RVR yard in Mombasa. FILE PHOTO | NMG
Locomotive engines at an RVR yard in Mombasa. FILE PHOTO | NMG  

Egypt’s Qalaa Holdings, has posted a Sh16.3 billion half-year net loss it largely blamed on the full impairment of its Africa Railways’ assets in Kenya.

The Kenyan government terminated Qalaa -owned Rift Valley Railways’(RVR) 25-year concession to run the Kenya-Uganda line in April, casting dark clouds over the future of the private operator. 

The government cited RVR’s failure to meet set operating targets, including payment of concession fees.

The firm said, in financial statements, it recorded a net loss worth EGP 2.8bn in the period ended June 30 2017, compared to EGP 277.5 million (about Sh1.6 billion) in 2016.

Chairperson and founder of Qalaa Ahmed Heikal said the impairment would free the firm to concentrate on other promising ventures.

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“More importantly, in second quarter of 2017 we took the difficult, but necessary decision to fully impair Africa Railways’ assets in Kenya. The impairment effectively caps future losses from a discontinued operation that is facing increased operational difficulty and is otherwise a drain on resources and capital that could be deployed to other, more promising growth avenues” he said.

“Additionally, we anticipate a substantial gain on our income statement once we cede control of Africa Railways’ and deconsolidate its EGP 5.6 billion (Sh32.7) in liabilities in the coming period.”

The company announced its revenues reached EGP 2.3bn (Sh13.4 billion) during the second quarter, with revenue growth of 25 per cent year on year.

The RVR is controlled 80 per cent by Qalaa, with the remaining fifth held by Uganda’s Bomi Holdings and international finance institutions (IFIs).

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