Railway’s divestiture suffers huge setback
Apr 04, 2004
THE world’s largest rail equipment servicer and manufacturer has pulled out of a joint venture with Uganda Railways Corporation (URC), a major set back to the privatisation of the utility, sources close to the deal said.
By Mikaili Sseppuya
THE world’s largest rail equipment servicer and manufacturer has pulled out of a joint venture with Uganda Railways Corporation (URC), a major set back to the privatisation of the utility, sources close to the deal said.
The Canadian based Bombardier Transportation won a five-year concession to manage URC’s workshop in Nalukolongo in May 1998, but negotiations to renew the contract failed late last year.
URC’s managing director Daudi Murungi said Bombardier Transport was closing all operations in Africa in accordance with directives from the headquarters.
“The important thing is not ownership but the workshop continuing to deliver services,†Murungi said.
But other sources who preferred anonymity said Bombadier had not renewed the contract because URC was failing to meet its side of the bargain.
“URC and the Government were unable to service the contract and had fallen back on payments to Bombardier,†the source said.
“The pull-out hurts because Bombardier’s management of the workshop was a key attraction for buyers of the concession,†he said.
Murungi said the withdrawal of Bombardier would not affect its concession programme, under which a core private investor was supposed to manage URC.
He said Uganda Railways had no immediate replacement for Bombardier.
Bombardier’s managing director Barry Brown declined to comment on the issue.
In 2001, the Nalukolongo-based workshop won the International P&O Nedlloyd Awards for Infrastructure due to its efficiency and was viewed as the best workshop in East Africa.
Since Bombadier began managing the workshop, it has made profits annually except in the first year of operation.
THE world’s largest rail equipment servicer and manufacturer has pulled out of a joint venture with Uganda Railways Corporation (URC), a major set back to the privatisation of the utility, sources close to the deal said.
The Canadian based Bombardier Transportation won a five-year concession to manage URC’s workshop in Nalukolongo in May 1998, but negotiations to renew the contract failed late last year.
URC’s managing director Daudi Murungi said Bombardier Transport was closing all operations in Africa in accordance with directives from the headquarters.
“The important thing is not ownership but the workshop continuing to deliver services,†Murungi said.
But other sources who preferred anonymity said Bombadier had not renewed the contract because URC was failing to meet its side of the bargain.
“URC and the Government were unable to service the contract and had fallen back on payments to Bombardier,†the source said.
“The pull-out hurts because Bombardier’s management of the workshop was a key attraction for buyers of the concession,†he said.
Murungi said the withdrawal of Bombardier would not affect its concession programme, under which a core private investor was supposed to manage URC.
He said Uganda Railways had no immediate replacement for Bombardier.
Bombardier’s managing director Barry Brown declined to comment on the issue.
In 2001, the Nalukolongo-based workshop won the International P&O Nedlloyd Awards for Infrastructure due to its efficiency and was viewed as the best workshop in East Africa.
Since Bombadier began managing the workshop, it has made profits annually except in the first year of operation.