Sheltam Trade Close Corporation (STCC), is part of a larger group that includes the Comazar Group, the biggest private railway operators in Africa with links with the Transnet group � South Africa's largest transport and logistics company.

With its headquarters in Port Elizabeth, Sheltam runs well-eqipped workshops for rail facilities and locomotives.

It was named the concessionaire for the joint concessioning of Kenya and Uganda Railways last week.

The company will pay both a fixed and variable fee to the government for the right to use make use of the track infrastructure and manage and operate trains on the network which remain in the ownership of the government.�

Through its local consortium, Rift Valley Railways, Sheltam edged out the Magadi Soda Corsortium, led by Rail India Technical and Economical Services Ltd (Rites) of India, at the technical evaluation stage, in a hotly contested bid that initially drew nine applicants.�

In its financial bid opened last Friday, Sheltam offered to pay the two countries $1 million annually out of its earnings from the passenger business. The firm will also remit 11. 1 per cent of its gross revenues every year, to be shared by the two countries.�

Rites had offered to pay -$6 million � a negative bid, meaning it would have sought subsidies from the governments to the tune of $6 million a year. Rites was also to remit 6. 01 per cent of its gross revenues to the two countries.�

Both Sheltam and Rites had bid to pay an upfront fees of $3 million and $2 million for Kenya Railways Corporation and Uganda Railways Corporation (URC) respectively.�

The concessioning process was set in motion by a memorandum of understanding signed by Kenya and Uganda binding them to put their railway networks in the hands of a private firm for the next 25 years.�

Sheltam managing director Roy Puffett told The EastAfrican that his firm would turn around the economically reeling Railways Corporations within a couple of years. "We have what it takes to put the corporations back on track. Our experience, expertise and track record is well showcased in our operations in South Africa," Mr Puffet said.�

As the concessionaire, Rift Val-ley Railways will now manage Kenya Railways Corporation (KR) and Uganda Railways Corporation (URC) for 25 years, after which the ownership will revert back to the governments. The Rites and Sheltam consortiums were the only two serious applicants who presented their bids last month after five others opted out of the race for undisclosed reasons. The bidding for a concession is usually designed to lock out less serious prospective bidders.�

It is estimated that Rites and Sheltam have each spent $1 million - $1.5 million in preparing their bids alone.�

According to a timetable given during the presentation of bids last month, Sheltam will now sign a concessioning agreement with the KRC and URC on November 20 and official handing over of assets will be done on March 31 next year.�

The concessionaire is expected to take over the two railways corporations from April next year, should the transition process go as per the schedule. Kenya and Uganda will retain 40 per cent of the shares of the ceded assets.�

Even as the transition gets to its home stretch, anxiety is building up over the fate of the KRC's 9,000 employees. Last month, it emerged that only 30 of the firm's 9,000 employees will be retained once the concessioning is concluded.�

However, KRC managing director Vitalis Ong'ong'a was last month quoted as saying that between 3,000 and 4,000 of the 6,200 permanent employees would be absorbed.

Finance Minister David Mwiraria is optimistic that the concessionaire will redeem the debt-ridden KRC.

As at June last year, KR had accumulated a total of Ksh20.5 billion ($277m) in debts. This year, KR expenditure has so far outstripped its income, resulting in a monthly cash deficit of about Ksh240 million ($3.2m).�

By the end of the fiscal year, it is estimated that the annual loss will be about Ksh2.9 billion ($39.1m), and the accumulated loss for the past six years will have risen to Ksh8 billion ($1,08.1m).�