What is happening with Rift Valley Railways?

News coming in from the company entrusted with running Uganda’s railway sector is not pleasant and workers have called upon government to repossess Uganda Railways.

Something seems to be going terribly wrong within the railway transport sector, which is currently managed by Rift Valley Railways (RVR). RVR, which is controlled by private equity firm Citadel Capital, holds the Kenya-Uganda concession to operate freight and passenger rail services in the two countries.

In a disturbing turn of events, the Uganda Railways’ Workers Union has written a letter to the Ministers of Transport and Works and that of Labor, saying that when government through a twenty-five year concession privatized Uganda Railways Corporation, they were optimistic about the performance of that sector. They argue however that what was expected then is not what is on the ground now.

The letter dated November 30th 2011 written by the National General Secretary of the Uganda Railways Workers’ Union Mr. V. Byemaro, indicates that the current state of the assets inherited by RVR from Uganda Railways Corporation (URC) in August 2006 are in an appalling state. “URC handed over to RVR 43 locomotives. Today, about half of the 43 are just limping because under normal circumstances a locomotive is supposed to be taken to the workshop for overhaul after 24,000 engine hours. But all the few limping locomotives have now almost doubled the mandatory 24,000-hour period without being overhauled,” the letter states.

It goes on that in order to keep some locomotives limping, RVR management has resorted to removing parts from those locomotives that are non-functional and have been parked in the yard, and putting those parts in the limping locomotives.

This method of work also applies to the ordinary goods wagons and tank wagons. “Our marshaling yards are gradually but surely becoming scrap yards for wagons and locomotives,” the workers say.

As for the Nalukolongo workshop in which government invested massively under URC, it is noted that the workshop was doing well before the concession. “Today, the once state-of-the-art Railway Workshop in East and Central Africa has become an eyesore. The roof leaks, some machines are non-functional with no spares and many of them need replacement.”

Workers maintain that they have no tools to maintain the railway lines, especially the lines between Kampala and Malaba, the railway bridges between Jinja Railway Station and Busembatia Railway station. They warned that if the current rains in the country continue, these stations and lines which are now already submerged stand the risk of being swept away by rain water. The issue of the ageing workforce in this sector is also raised in the letter. RVR management is accused of not recruiting personnel at the bottom-the people who do the real work of maintaining the locomotives and wagons, there is neither training nor motivation, but instead management is recruiting massively at the top level and there is high motivation and good remuneration at that level.

And when it comes to industrial relations, the workers are accusing the RVR management of stifling their collective bargaining processes and that all the promises management has made to them have not been honored. “In light of all that has been stated in this letter, it is evident that the company (RVR) is sliding into a state of virtual collapse. When one looks at RVR Uganda today, there is nothing to be proud of, and this has inevitably created a lot of anxiety among the workers who now know that unemployment is knocking on the door,” it is stated.

On December 2nd 2011, the workers took their grievances to the RVR Chairman of the Human Resource Committee and RVR Uganda Vice Chairman Mr. Charles Mbire. He promised to have some of them addressed before December 14th 2011, but by press time, there had been no response.

Just recently in August last year, RVR Uganda and Kenya got a US $ 164 million boost from six global financial institutions to upgrade the rail infrastructure in the two countries. The package which was signed was in Nairobi was attended by the Ugandan Finance Minister Maria Kiwanuka on behalf of Uganda and the Kenyan Minister for Transport Amos Kimunya. In a joint statement, the two ministers from Kenya and Uganda hailed the signing of the financial package, saying it marked a turning point in efforts of interlinking transport infrastructure between the two countries.

RVR has a 25-year concession to operate the 2,352-kilometer rail line between Uganda and Kenya. The financing deal was expected to boost efforts to improve the interconnection between Kampala and Nairobi and the region’s biggest port in Mombasa.

This in turn would strengthen the economic development of the East African region. Transport prices in East Africa are among the highest in the world due to heavy reliance on road transport. Rail transport in the region lacks the adequate capacity to meet the transport needs of the region.

An efficient rail network would bring East African rail transport costs down by as much as 35% due to the operational and fuel efficiency of rail.

At the signing ceremony in August in Nairobi, Kimunya said that RVR had presented several investment plans for track maintenance, rehabilitation of locomotives and wagons for consideration by the governments of Kenya and Uganda, and it was expected that following the signing of the loan agreements between RVR and the lenders, finances would be released expeditiously for the implementation of those plans.

He added that it was therefore expected that in the next few years, the people of Kenya and Uganda would be able to see and experience rehabilitated rail infrastructure, locomotives and wagons, railway freight tariffs that are competitive, and significant increase in freight haulage between Mombasa and Kampala and a shift of cargo from road to rail.

Speaking at the event, Ms. Maria Kiwanuka, hailed the deal as a landmark saying it had earned East African rail transport a new lifeline. “This marks the new age of railway in East Africa,” she said. Her comments were echoed RVR Group chief executive officer Brown Ondego who exuded confidence in the turn-around of the company.

He said the funds would first be channeled to modernization of the rail infrastructure as a matter of priority.

The financial institutions that provided the financial boost include the African Development Bank (AfDB) with US$ 40 million, International Finance Corporation (IFC) with US$ 22 million, The German Development Bank offering US$ 32 million, and the Dutch development bank with US$ 20 million. Others are Kenya’s Equity Bank with US$ 20 million, the ICF Debt Pool with US$ 20 million and the Belgian Investment Company for Developing Countries giving US$ 10 million.

Citadel Capital that is the biggest RVR shareholder with 51 Percent shares was expected to invest $82 million into the project. Other shareholders in RVR are Transcentury Ltd in Nairobi with 34 Percent and Bomi Holdings which belongs to tycoon Charles Mbire with 15 Percent.

After signing the Nairobi deal, RVR Uganda announced in the same month that it was ready to start commuter train services to link Kampala City with its suburban towns to ease transport in the city and beat the brutal traffic jams, but this has not come to be. RVR Uganda’s Operations Manager Peter Owollo said that they were going to provide rail transport five days a week to those parts of the city that have the rail network.

He had also promised that his company would, after a month of running the city commuter services, cover Jinja areas over the weekends.

by Edward Ronald Sekyewa