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Signed EAC rail pact to spark trade

By Vision Reporter

Added 29th August 2010 03:00 AM

THE conclusion of negotiations on the Kenya-Uganda railways concession will have profound impact on the business competitiveness of East Africa, experts have said.

By David Mugabe

THE conclusion of negotiations on the Kenya-Uganda railways concession will have profound impact on the business competitiveness of East Africa, experts have said.

Analysts have said an efficient rail network could, in time, bring East African transport costs down by as much as 35% due to the operational efficiency of shipping by rail.

Uganda especially, will benefit from cheap railway transport to carry recently discovered heavy natural resources.

Today, almost all of the goods carried to the coast by rail constitute just about 10% of the total goods that are ferried. Yet rail, alongside water transport are the most efficient modes of transport for long haul heavy merchandise.

The 2,352 kilometre Uganda-Kenya line links Mombasa to Uganda and has been a missing link in propping up movement of Uganda’s agricultural produce and mineral products.

The option has been the expensive yet slow road network.

Reports indicate that the Rift Valley Railways today hauls just over one million tonnes per annum out of an existing market of 16 million tonnes being handled in Mombasa.

It is estimated that transport to Uganda from Kenya presently costs more than $0.13 per tonne/kilometre due in part to heavy reliance on trucking.

Projections are that after the injection of about $287m by the new investors, about five million tonnes per year of cargo will be moved by 2015.

Citadel Capital’s stake in RVR has risen to 51%, giving it a major control in the concessionaire.

Other shareholders are Kenya’s Transcentury and Uganda’s Bomi Holdings.

“We look forward to working with our partners to build the reliable, efficient and safe national rail system Kenyans and Ugandans truly deserve,” said Karim Sadek, the managing director.

The partners are in advanced stages of sourcing a global rail consultant to bring in international best practices, which will add value to this giant operation saving it from the basket case of mismanagement due to lack of expertise.

Across Africa, railway transport has largely failed to take off, apart from Morocco, Egypt, Zambia and South Africa.

Signed EAC rail pact to spark trade

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