Govt terminates RVR contract

The Government has terminated the concession for the Rift Valley Railways (RVR), over breach of  contract and causing a loss of $784.4m (sh2.824 trillion). 

According to state minister for investment Evelyn Anite, the Uganda Railways Corporation will resume management and operation of the railway services with immediate effect.

"There is no more room for negotiations with RVR as they have continually breached the terms of agreement," she said while reading the termination later signed by finance minister Matia Kasaija, at the URC offices on Friday.

Anite said in addition, RVR has failed to remit $8.5m (sh30.6b) concession fees, performed bellow expectation on the agreed annual flight volume and failed to submit annual audit reports to the government and URC.

She said the concessioner also failed to maintain and operate the Pakwach line contrary to the concession agreement and damaged assets conceded from government at the commencement of their concession.

"When they took over, we had 45 wagons in operation, but today we have only 16 left. All they have left behind for us is a big mess which we must now address," she said.

The RVR which is 80% owned by Cairo-based Qalaa Holding won the concession to operate the country's 1918km rail network in 2006 in a deal that was meant to span 25 years.

According to reliable sources, the journey to termination picked pace in mid-March when Kenyan officials travelled to Kampala for a meeting with their Ugandan counterparts to assess RVR's performance.

The source said Qalaa's head of transportation division, Karim Sadek, who was expected to attend the meeting, failed to show up, choosing to send a junior officer instead.

"This irritated the officials, considering that RVR had performance issues in Kenya and Uganda, which they were trying to sort out. By the end of the meeting, the officials had passed a resolution to terminate the contract at the end of a 90-day notice," the source said.

Works and transport minister, Monica Ntege said the Government is ready to facilitate revival of the rail system and urged URC to immediately focus on delivery of cargo which is stuck between Mombasa and Malaba.

"Some of these goods are stuck because of lack of fuel for the trains to move and our traders are too stuck," she said.

She said URC has also to ensure that the central corridor route through Tanzania is opened to provide an alternative and increase competitiveness in cargo transportation.

The URC board chairman, Hannington Karuhanga, said the corporation is taking on an immense job, considering all conceded assets are in bad shape.

"The level of dilapidation of the assets is bad. However, we have managed this organisation before and we shall do it again effectively," he said