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A new dawn for the Lunatic Express

Daily Nation: 10/23/2005
by GAKUU MATHENGE

The Kenya-Uganda Railway has undergone yet another milestone.

The 2,350km line, which a famed Gikuyu sage and seer, Mugo wa Kibiru, and Nandi orkoiyot and resistance leader, Koitalel arap Samoei, are said to have separately prophesied about long before the white man set foot in Kenya, will be managed by a South Africa-led group, the Rift Valley Railways Consortium for the next 25 years.

The consortium, that has one local firm � Primefuels (Kenya Ltd) � with a 15 per cent stake, emerged the winning bidder in the first-ever concessioning experiment in Kenya. It will sign an agreement with the two governments on November 21 and take over the management and assets of the entire line on March 30 next year.

"The transaction represents the first privatisation deal where the concessioning structure has been used. Both Kenya and Uganda have involved several cross-border initiatives, including the extension of the oil pipeline to Uganda. The joint concession has set the stage for further regional co-operation," said Investment Secretary Esther Koimett in a joint statement during the official announcement of the winning bidder.

The Kenya-Uganda Railways, billed the Lunatic Express, will change management for the third time since it was started in the 19th century.

It is the third time the Kenya-Uganda Railways, billed the Lunatic Express by pessimists who scoffed at its conception, is changing management since it was started at the end of the 19th century. It became the East African Railways and Harbours Corporation, that was split up and assets taken by the respective governments in Uganda, Tanzania and Kenya following the collapse of the East African Community in 1977.

Since 1978, Kenya Railways Corporation (KR) has been on a steady decline. Between 1978 and 2005, the KR cargo freight market share dropped from 70 per cent to under 20 per cent. Cargo haulage fell from 4.3 tonnes in 1983 to just 2.8 tonnes in 2005. It has also accumulated debts totaling Sh20.5 billion.

However, the new move come with painful reforms, including the retrenchment of thousands of workers. The firm has a workforce of 7,000.�

Primefuels Group, headquartered at Longonot Place, Kijabe Street, Nairobi, is a liquid fuel logistics provider in East Africa. It consists of two operating companies � Primefuels (Tanzania) and Primefuels (Kenya). Primefuels was also part of the Great Lakes Railway Company consortium, which also has Sheltam and Comazar as partners, that bid for the concessioning of Tanzania Railways. Efforts by the Sunday Nation to get a comment from Primefuel's chief executive officer, Mr Asif Abdulla, were unsuccessful as he was said to have travelled to South Africa.�

The Rift Valley Railways Consortium is led by Sheltam Rail Company (Pty) Limited, a South African firm with experience in rail services in several African countries. Sheltam, with 61 per cent, is the leading shareholder followed by Primefuels of Kenya with 15 per cent. Others are Comazar (Pty) Ltd, South Africa (10 per cent); Mirambo Holdings Limited, Tanzania (10 per cent); and CDIO Institute for Africa Development Trust, South Africa (4 per cent).�

Sheltam was incorporated in 1999 and is involved in management services, locomotive maintenance, track maintenance, mining and railway operations. Among countries it is operating in are Mozambique, Zimbabwe and Swaziland.

Sheltam also operates mine tracks in South Africa, similar to those operated by the Magadi Soda, the only private firm in Kenya that has its own rail tracks.

The Comazar Group, who are the technical partners, bring expertise in private rail management to the consortium. Founded in 1995, it has been active in 15 African countries. The Sheltam Group of Companies, which owns Sheltam Rail, has 46 per cent shareholding in the Comazar Group.

Comazar is currently is the lead investor in operating the rail systems in Cameroon, Cote d'Ivoire and Madagascar. Camrail of Cameroon was granted a 20-year concession to operate the country's national railway.�

Sitarail was given a 15-year concession to operate the national railways in Cote d'Ivoire and that of Burkina Faso.�

In Madagascar, Madarail got a 25-year concession deal in 2003 to operate the Northern Railway network.�

Comazar is also part of a consortium that has been pre-qualified to operate railways in Senegal, Algeria, Congo, Ethiopia/Djibouti, Uganda and Tanzania.�

Mirambo Holdings, an investment company registered in Tanzania, was set up to take part in the concessioning in Kenya. It is part of a group that also has interests in contract mining, agricultural infrastructure, cellular telephony and leather businesses.�

CDIO Institute for Africa is an engineering and technology firm. It was established in 2004 to develop bilateral relations in engineering and technology between South Africa and Sweden.