Rift Valley Railways Consortium
Encyclopedia
The Rift Valley Railways Consortium (RVR) is a consortium
Consortium
A consortium is an association of two or more individuals, companies, organizations or governments with the objective of participating in a common activity or pooling their resources for achieving a common goal....
that was established to manage the parastatal railways of Kenya and Uganda
Uganda Railways Corporation
Uganda Railways Corporation is the parastatal railway of Uganda. It was formed after the breakup of the East African Railways Corporation in 1977 when it took over the Ugandan part of the East African railways....
. The consortium won the bid for private management of the century-old Kenya-Uganda railway
East African Railways and Harbours Corporation
The East African Railways and Harbours Corporation was formed in 1948 for the new East African High Commission by merging the Kenya and Uganda Railways and Harbours with the Tanganyika Railway of the Tanganyika Territory...
in 2005.
History
The railway line, derided as the 'Lunatic Line' by a critical British press during its construction (and still referred to colloquially as the 'Lunatic Express' even to the current day), runs some 900 kilometres (559.2 mi) from Kenya's Indian OceanIndian Ocean
The Indian Ocean is the third largest of the world's oceanic divisions, covering approximately 20% of the water on the Earth's surface. It is bounded on the north by the Indian Subcontinent and Arabian Peninsula ; on the west by eastern Africa; on the east by Indochina, the Sunda Islands, and...
port of Mombasa
Mombasa
Mombasa is the second-largest city in Kenya. Lying next to the Indian Ocean, it has a major port and an international airport. The city also serves as the centre of the coastal tourism industry....
, through Nairobi
Nairobi
Nairobi is the capital and largest city of Kenya. The city and its surrounding area also forms the Nairobi County. The name "Nairobi" comes from the Maasai phrase Enkare Nyirobi, which translates to "the place of cool waters". However, it is popularly known as the "Green City in the Sun" and is...
, and up the Rift Valley
Great Rift Valley
The Great Rift Valley is a name given in the late 19th century by British explorer John Walter Gregory to the continuous geographic trench, approximately in length, that runs from northern Syria in Southwest Asia to central Mozambique in South East Africa...
to Kisumu
Kisumu
Kisumu is a port city in western Kenya at , with a population of 355,024 . It is the third largest city in Kenya, the principal city of western Kenya, the immediate former capital of Nyanza Province and the headquarters of Kisumu County. It has a municipal charter but no city charter...
on the shores of Lake Victoria
Lake Victoria
Lake Victoria is one of the African Great Lakes. The lake was named for Queen Victoria of the United Kingdom, by John Hanning Speke, the first European to discover this lake....
. Another leg of the same railway system traverses the Great Rift Valley, through the town of Eldoret
Eldoret
Eldoret is a town in western Kenya and the administrative centre of Uasin Gishu District of Rift Valley Province. Lying south of the Cherangani Hills, the local elevation varies from about 2100 metres above sea level at the airport to more than 2700 metres in nearby areas...
in Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
, enters Uganda
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
at Malaba
Malaba, Uganda
Malaba, Uganda is a town in Tororo District, Eastern Uganda, on Uganda's eastern border with Kenya.-Location:The town is located on the main highway between Kampala and Nairobi, approximately , by road, east of Kampala, Uganda's capital and largest city...
and passes through Tororo
Tororo
Tororo is a town in Eastern Uganda. It is the main municipal, administrative and commercial center of Tororo District. The district was named after the town.-Location:...
and Jinja
Jinja, Uganda
Jinja is the largest town in Uganda, Africa. It is the second busiest commercial center in the country, after Kampala, Uganda's capital and only city. Jinja was established in 1907.-Location:...
to enter Kampala
Kampala
Kampala is the largest city and capital of Uganda. The city is divided into five boroughs that oversee local planning: Kampala Central Division, Kawempe Division, Makindye Division, Nakawa Division and Lubaga Division. The city is coterminous with Kampala District.-History: of Buganda, had chosen...
, Uganda's capital. From Kampala, the railway continues on to Kasese
Kasese
Kasese is a town in Western Uganda, lying north of Lake George. It originally grew around the copper mine at Kilembe, while attention later turned to cobalt mining. It is the 'chief town' of Kasese District and the district headquarters are located there...
in Western Uganda
Western Region, Uganda
Western Region is a region of Uganda. It is divided into the following districts:...
, close to the border with the Democratic Republic of the Congo
Democratic Republic of the Congo
The Democratic Republic of the Congo is a state located in Central Africa. It is the second largest country in Africa by area and the eleventh largest in the world...
, approximately 1600 kilometres (994.2 mi), northwest of Mombasa
Mombasa
Mombasa is the second-largest city in Kenya. Lying next to the Indian Ocean, it has a major port and an international airport. The city also serves as the centre of the coastal tourism industry....
, Kenya. At Tororo, the northern leg of the Ugandan railway system branches off and travels northwestwards, through Mbale
Mbale
Mbale is a city in Eastern Uganda. It is the main municiplal, administrative and commercial center of Mbale District and the surrounding sub-region. The district is named after the town.-Location:...
, Soroti
Soroti
Soroti is the main municipal, commercial and administrative centre of Soroti District in Eastern Uganda, lying near Lake Kyoga. It is known for the rock formation near the town as well as a variety of Muslim mosques, Hindu temples, Sikh gurdwaras as well as several churches that meet in various...
and Lira
Lira
Lira is the name of the monetary unit of a number of countries, as well as the former currency of Italy, Malta, San Marino and the Vatican City and Israel. The term originates from the value of a Troy pound of high purity silver. The libra was the basis of the monetary system of the Roman Empire...
to end in the city of Gulu
Gulu
Gulu is a city in Northern Uganda. It is the commercial and administrative centre of Gulu District. The city is located at 2˚46'48N 32˚18'00E, on the metre gauge railway from Tororo to Pakwach. Gulu is located approximately , by road, north of Kampala, Uganda's capital and largest city...
, the largest metropolitan area in Northern Uganda
Northern Region, Uganda
Northern Region is a region of Uganda. It is divided into the following districts:...
. From Gulu, the line continues west to Pakwach
Pakwach
- Location :Pakwach is located in Nebbi District, in West Nile sub-region, in Northern Uganda. It is situated approximately , by road, southeast of Arua, the largest town in West Nile. This location lies along the western bank of the Albert Nile, approximately , by road, southwest of Gulu, the...
, on the banks of the Albert Nile, approximately 1500 kilometres (932.1 mi), northwest of Mombasa
Mombasa
Mombasa is the second-largest city in Kenya. Lying next to the Indian Ocean, it has a major port and an international airport. The city also serves as the centre of the coastal tourism industry....
, Kenya.
Development
In December 2010, RVR announced plans to increase freight volumes by 350% in the next year by improving the infrastructure, in particular upgrading old rails.Original Shareholding
Originally, RVR was led by Sheltam Rail Corporation of Sheltam Trade Close Corporation (STCC) of South AfricaSouth Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
that has experience with management of other African railways. Minor partners of the consortium were Kenya’s Prime Fuels (15%), Mirambo Holdings of Tanzania
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...
(10%) and Comazar
Comazar
Comazar is a company that operates railways in Africa. Its stock is majority owned by the French investment group Bolloré.Comazar was founded by Eric Peiffer and Patrick Claes in conjunction with Transnet and Transurb Consult in 1995.The headquarters are in Johannesburg.- Related organizations...
(10%) and the CDIO Institute for Africa Development Trust (4%), both of South Africa. The consortium plans to invest in the railway system, upgrade it, reduce inefficiencies, utilize a smaller work force, and generate an annual concession fee of 11.1% in each country. In addition it will pay 1 million United States dollars each year for the passenger service concession in Kenya and 500,000 US dollars annually to Uganda for the same reason.
On 28 July 2006 the East African Standard reported that the take-over, originally planned for 1 August 2006, was postponed to 1 November 2006. This operational take-over took place in November and is scheduled to last for 25 years.
The 2007–2008 Kenyan crisis
2007–2008 Kenyan crisis
The 2007–2008 Kenyan crisis refers to a political, economic, and humanitarian crisis that erupted in Kenya after incumbent President Mwai Kibaki was declared the winner of the presidential election held on December 27, 2007. Supporters of Kibaki's opponent, Raila Odinga of the Orange Democratic...
included destructive riots that blocked and partly destroyed the rail system between Kenya and Uganda leading to difficulties in supply. Further, destruction and loss of income led to significant financial losses.
On 9 October 2008, Toll Holdings
Toll Holdings
TOLL , properly TOLL Holdings Limited, is Australia's largest transport company, based in Melbourne, Victoria. The company has operations in road, rail, sea and air in 55 countries....
of Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
announced that it has entered into a contract to manage the Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
-Uganda
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
railway, replacing the management by Rift Valley Railways Consortium (RVR). The consortium has been criticized for falling freight traffic in the two years since taking control, while RVR alleges the drop is due to the poor condition of the railway infrastructure and the damage done by protesters during the 2007–2008 Kenyan crisis. Officers from Toll subsidiary Patrick Defence Logistics will manage the railway after the transition. As of February 2010 the Kenya Uganda railway is still under the management of the Rift Valley Railways Consortium.
Shareholding in early 2010
In February 2010, the East African CommunityEast African Community
The East African Community is an intergovernmental organisation comprising the five east African countries Burundi, Kenya, Rwanda, Tanzania, and Uganda. Pierre Nkurunziza, the President of the Republic of Burundi, is the current Chairman of the East African Community. The EAC was originally...
announced plans to raise capital to "upgrade and expand the existing railway network to boost the region’s competitiveness". In a related development, the Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
ian investment company Citadel Capital, bought a 49% stake in Sheltam Railway Company of South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
, the lead investor in the RVR consortium. The current shareholding in RVR is represented in the table below:
{| style="font-size:95%;"
|-
| width="80%" align="center" | Rift Valley Railways Stock Ownership
|- valign="top"
|
{| class="wikitable sortable" style="margin-left:auto;margin-right:auto"
! style="width:2em;" |Rank !!Name of Owner!!Percentage Ownership
|-
|1||Sheltam Railways of South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
||35.0
|-
|2||Trans-Century Limited of Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
||20.0
|-
|3||Prime Fuels Limited of Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
||15.0
|-
|4||Centum Investments of Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
||10.0
|-
|5||Mirambo Holdings of Tanzania
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...
||10.0
|-
|6||Babcock & Brown of Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
||10.0
|-
| || Total||100.0
|-
|}
Disagreements
During the first quarter of 2010, there has been rancor among the six (6) disparate shareholders in the consortium as they jostle for control of the company. Citadel Capital of Egypt, by buying 49% of the lead investor in the consortium, has changed the balance of power among the shareholders. Trans-Century filed a lawsuit in an attempt to block Citadel Capital's entry into the consortium, but was turned away by the court in MauritiusMauritius
Mauritius , officially the Republic of Mauritius is an island nation off the southeast coast of the African continent in the southwest Indian Ocean, about east of Madagascar...
, where RVR is incoprorated. Press reports from East Africa
East Africa
East Africa or Eastern Africa is the easterly region of the African continent, variably defined by geography or geopolitics. In the UN scheme of geographic regions, 19 territories constitute Eastern Africa:...
indicate that Charles Mbire
Charles Mbire
Charles Mbire is a businessman, entrepreneur and industrialist in Uganda. He is reported to be the wealthiest indigenous Ugandan, with an estimated net worth in excess of US$65 million, as of December 2008.-Background:...
, a wealthy Ugandan entrepreneur
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
, who represents Uganda on the RVR Board of Directors, has expressed an interest to purchase the 15% shareholding that should be reserved for Ugandans in the RVR consortium.
Current shareholding
In March 2010, the RVR shareholders met in LondonLondon
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, under binding arbitration. Following those talks, the new shareholding in RVR is as summarized in the table below, effective April 2010. Africa Railways is a subsidiary of Citadel Capital, an Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
ian private equity firm. Trans-Century Limited is a private Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
n investment company, whose shares are listed on the Nairobi Stock Exchange
Nairobi Stock Exchange
The Nairobi Securities Exchange is the principal stock exchange of Kenya. It began in 1954 as an overseas stock exchange while Kenya was still a British colony with permission of the London Stock Exchange. The NSE is a member of the African Stock Exchanges Association...
. Bomi Holdings Limited is a Uganda
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
n investment company owned by Ugandan entrepreneur and RVR Director, Charles Mbire
Charles Mbire
Charles Mbire is a businessman, entrepreneur and industrialist in Uganda. He is reported to be the wealthiest indigenous Ugandan, with an estimated net worth in excess of US$65 million, as of December 2008.-Background:...
. The revised shareholding agreement was signed in Kampala
Kampala
Kampala is the largest city and capital of Uganda. The city is divided into five boroughs that oversee local planning: Kampala Central Division, Kawempe Division, Makindye Division, Nakawa Division and Lubaga Division. The city is coterminous with Kampala District.-History: of Buganda, had chosen...
, Uganda
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
's capital city on 25 August 2010. The new owners pledged to invest US$250 million in the consortium to revitalize the railway network.
{| style="font-size:100%;"
|-
| width="100%" align="center" | Rift Valley Railways Stock Ownership
|- valign="top"
|
{| class="wikitable sortable" style="margin-left:auto;margin-right:auto"
! style="width:2em;" |Rank !!Name of Owner!!Percentage Ownership
|-
|1||Africa Railways of Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
||51.0
|-
|2||Trans-Century Limited of Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
||34.0
|-
|3||Bomi Holdings Limited of Uganda
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
||15.0
|-
| || Total||100.0
|-
|}
Partnerships
In November 2010 Rift Valley Railways Consortium signed a technical and management agreement with América Latina Logística, based in CuritibaCuritiba
Curitiba is the capital of the Brazilian state of Paraná. It is the largest city with the biggest economy of both Paraná and southern Brazil. The population of Curitiba numbers approximately 1.75 million people and the latest GDP figures for the city surpass US$61 billion according to...
, Brazil. The firm is the largest independent company of its kind in Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
. It has operations in Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
and Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, where it oversaw the successful privatization of the national railway system. América Latina Logística will provide RVR with key management and operational staff and will oversee the transfer of technology, including selection and sourcing of raw material and IT software and hardware
Hardware
Hardware is a general term for equipment such as keys, locks, hinges, latches, handles, wire, chains, plumbing supplies, tools, utensils, cutlery and machine parts. Household hardware is typically sold in hardware stores....
. The initial partnership is for a renewable term of five (5) years, starting in November 2010.
New financing
In March 2011, media reports indicated the RVR intended to raise US$240 million to fund its expansion plans over the next five (5) years. US$140 million will be raised by capital injection by the three corporate investors. The remaining US$100 will be borrowed from commercial banks. RVR already has a credit line estimated at about US$54 million.In July 2011, RVR secured a US$40 million loan from the African Development Bank
African Development Bank
The African Development Bank Group is a development bank established in 1964 with the intention of promoting economic and social development in Africa...
(AfDB) to finance its improvements and expansion. In the same month, RVR reported a positive EBITDA
EBITDA
EBITDA is an acronym for earnings before interest, taxes, depreciation, and amortization. It is a non-GAAP metric that is measured exactly as stated. All interest, tax, depreciation and amortization entries in the income statement are reversed out from the bottom-line net income...
(Earnings before interest, taxes, depreciation and amortization), for the year ending 30 June 2011. This marks the first positive annual EBITDA since African Railways acquired a 51% stake in RVR, in late 2009.
In August 2011, East Africa media outlets reported that RVR had secured a US$164 million long-term loan from a consortium
Consortium
A consortium is an association of two or more individuals, companies, organizations or governments with the objective of participating in a common activity or pooling their resources for achieving a common goal....
of six (6) International financial institutions, which include (a) International Finance Corporation
International Finance Corporation
The International Finance Corporation promotes sustainable private sector investment in developing countries.IFC is a member of the World Bank Group and is headquartered in Washington, D.C., United States....
(IFC), (b) German Development Bank
KFW
KFW may refer to:*Keith Fullerton Whitman , an American musician*KfW or Kreditanstalt für Wiederaufbau, a German public-sector financial institution...
(KfW) (c) Equity Bank Group
Equity Bank Group
Equity Bank Group, is a financial services organization in East Africa. The Group's headquarters are located in Nairobi, Kenya, with subsidiaries in Kenya, Uganda, and South Sudan...
and (d) Dutch Development Bank (FMO). Another US$80 million will be raised by the shareholders. The difference will be realized from internally generated profits. The total amount needed over the next five years has been revised to US$287 million.
Future investments
In August 2011, media outlets in East Africa reported that RVR was interested in financing and building the railway line linking Juba, the capital of South SudanSouth Sudan
South Sudan , officially the Republic of South Sudan, is a landlocked country located in the Sahel region of northeastern Africa. It is also part of the North Africa UN sub-region. Its current capital is Juba, which is also its largest city; the capital city is planned to be moved to the more...
, to the industrial town of Tororo
Tororo
Tororo is a town in Eastern Uganda. It is the main municipal, administrative and commercial center of Tororo District. The district was named after the town.-Location:...
in Eastern Uganda
Eastern Region, Uganda
Eastern Region is a region of Uganda. It is divided into the following districts:...
, at the International border between Uganda
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
and Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
, an estimated distance of approximately 700 kilometres (435 mi), through Gulu
Gulu
Gulu is a city in Northern Uganda. It is the commercial and administrative centre of Gulu District. The city is located at 2˚46'48N 32˚18'00E, on the metre gauge railway from Tororo to Pakwach. Gulu is located approximately , by road, north of Kampala, Uganda's capital and largest city...
and Nimule
Nimule
Nimule is a town in South Sudan, immediately north of the International border with Uganda.-Location:Nimule is located in Magwi County, Eastern Equatoria State, South Sudan, adjacent to the border with the Republic of Uganda. This location lies approximately , by road, southeast of Juba, the...
. The decision to proceed with this project would require approval from all partners in the RVR consortium and from the governments of Uganda and South Sudan.