Govt opens Uganda Railways to private operation

KAMPALA - The Government has drafted a Bill that will open Uganda’s railways sector to private investment. If passed into law, private entities will be allowed to invest in passenger lines, warehouses, operations or workshops. 

According to the Uganda Railways Bill 2024, a person who wishes to access the railway network for commuter or passenger services shall apply to the minister for a licence, specifying the scope of service to be offered, area of operation and proof of adequate financial ability to operate the business, among others. 

However, where the lines are not commercially viable, the Bill proposes that the railway services be run by the Government. 

It also proposes that although the services may be operated by a private investor, the schedule of the trains offering commuter and passengers services will be set by Uganda Railways Corporation (URC).

The Bill gives power to the minister to approve the fares, rates and charges proposed by the train operator for use of railway infrastructure. 

The charges include freight, passenger, port, warehousing, internal container depot, carnage, wayleaves, wagon and locomotive charges, repair workshop and any other as the minister may prescribe. 

It proposes that the train operator put in place quality assurance measures in rail infrastructure, rolling stock, capacity building and all other operations of the corporation. 

To protect passengers, the Bill proposes that the private investor shall submit a five-year safety management plan whose violation will result in a fine not exceeding sh10m or imprisonment for a term not exceeding five years or both. 

“The operator shall submit to the regulator on a quarterly basis a safety report detailing all accidents and incidents that occur, and the regulator shall also conduct bi-annual audits on the operator’s infrastructure and operations to ensure that safety standards are being complied with,” the Bill states. 

During a workshop for railways sector stakeholders on Tuesday, the works and transport ministry permanent secretary, Bageya Waiswa, said the URC 2025 Bill seeks, among other things, to replace the Uganda Railways Corporation Act, enacted in 1992, which no longer adequately responds to the challenges and opportunities in the sector. 

Waiswa’s speech was read by Benon Kajuna, the URC managing director, during the workshop at the ministry’s training centre at Kyambogo in Kampala. 

However, participants insisted that the Government should open the space for private sector investment in passenger and cargo train services. 

Kajuna said the ministry’s proposals in the Bill were compiled after consultations across Uganda and East Africa. The URC managing director said the consultations revealed a strong consensus on the need for an independent railway regulator and a dedicated railway training institute.

Heavy penalties 

Yet to be tabled in Parliament, the Bill proposes fines of up to sh20m or five years in jail or both for those who encroach on railway reserves or vandalise railway infrastructure. 

Last year, the works and transport ministry sought the help of the .army to protect railway line vandals after cases were registered after billions of shillings were invested in the rehabilitation of the Kampala-Mukono line.

On March 18, URC said they had registered cases of people vandalising the materials, dumping garbage on the line and selling merchandise, theft of ballast (stones), and switches (points) and stealing of newly installed signage.

Sh50m fine for train obstruction 

The Bill also proposes a fine of sh50m or imprisonment not exceeding 10 years or both for any person who does any act which obstructs or is likely to obstruct the working of a train, vessel or vehicle of the train operator or damages or in any way interferes with the property of the train operator in such a manner as to endanger or to be likely to endanger the life of any person. 

The Bill further proposes that a person who constructs a road across an existing railway line or constructs a railway line across an existing road without authorisation is liable to a fine of sh20m on conviction or imprisonment for a term not exceeding five years or both.

Disobedience crew members 

To ensure discipline among the crew members, the Bill proposes a fine of sh20m and imprisonment for a period of one year for a member of the crew who disobeys lawful orders given to him or her employer or deserts his or her employment.

The Bill also proposes a penalty for passengers found around the train, operators ‘and corporation property in the dark without permission, persons who enters any party of a train not intended for passengers and refuses to leave when asked to. Such persons are liable on conviction to a fine of sh10m or imprisonment of a term not exceeding five months.

Forging tickets 

On tickets, the Bill proposes that any person who sells or parts with any ticket or free pass for any other person to travel with it on a train commits an offence and is liable to a fine of sh1m or imprisonment not exceeding one year.

Carrying dangerous goods 

The Bill proposes that any person who, without prior written consent of the corporation, carries any dangerous good likely to cause an accident,t including explosive substance, illegal firearms, bullets, commits a crime and is liable to a fine of sh10m imprisonment not exceeding one year.

What experts say

Frank Ssebowa, former executive director of the Uganda Investment Authority, described the move to open up the railway sector to private individuals as a bad idea.

He argued that there is nowhere in the world with a privately-run railway sector. Instead, Ssebowa suggested that the Government should explore public-private partnerships.

John Walugembe, the executive director of the Federation of Small and Medium-sized Enterprises – Uganda, welcomed the move to involve private individuals in the railway sector, but emphasised the need for further study to assess its effectiveness.

In principle, he said, private sector involvement can work if well executed. However, Walugembe said operating a railway network is capital-intensive and typically requires government involvement.

Walugembe referenced a previous failed concession, where the Government had to step in.

“A railway network requires significant investment to operate, and you cannot operate a limited section like from Kampala to Jinja and expect it to be viable,” he said.

Walugembe also warned that having multiple actors in the sector could lead to confusion and doubted that private individuals alone could operate a railway line sustainably without government involvement.

Morrison Rwakakamba, the former chairperson of the board of directors at Uganda Investment Authority, welcomed the move, saying the private sector brings innovation, investment and capital.

He said the Government’s role should be to establish good policies and allow the private sector to invest. Rwakakamba added that, as profit-driven entities, private companies would prioritise efficiency.

Filed by Mary Karugaba, Samuel Balagadde and Michael Odeng