Uganda Signs Railway Concessioning Deal
African News: April 8, 2006
The Ugandan Government finally signed the rail deal with Rift Valley consortium yesterday after a court injunction barring the concessioning was quashed.
The firm now has the authority to run the joint Kenya/Uganda railway.
Sources said the consortium led by Sheltam of South Africa signed the agreement in Kampala yesterday.
While Kenya had signed it's part of the deal almost three months ago, two former Sheltam partners went to court in Uganda seeking orders to bar the consortium from sealing the deal.
The two, Mirambo Holdings and Primefuels Kenya, argued that Sheltam had unlawfully dropped them from the consortium three days before Kenya authorities signed the deal.
However, while addressing the EAC heads of State summit in Arusha on Tuesday, President Yoweri Musevei pledged to finalise the agreement.
Museveni argued that an efficient railway system was vital for economic integration in the EAC and he would not allow the deal to be delayed any further.
"We cannot have one part of the railway running and the other not. We want the railway to run as one unit," he said.
With Uganda signing the agreement, the group will now run the railway network from Mombasa to Kampala for the next 25 years.
The World Bank had pledged Sh4 billion to support the concessioning project.
The credit that was approved by the bank's board in January includes a partial risk guarantees worth $45 million (Sh3.6 billion).
An additional $15 million (Sh1 billion) was given as grant in support of the Joint Railway Concession in Kenya and Uganda.
Sources said this is the first time that the bank is providing partial risk guarantee for a transport project.
During negotiations to privatise the two rail networks, the International Finance Corporation advisory services acted as transaction advisor.
"The project will also improve the efficiency of the region's trade," said the bank in a statement.
"At the moment, dwell time at the port of Mombasa is about 13 days and the average transport time between Mombasa and Kampala is estimated at five-to-six days."
However, approximately five per cent of containers still spend more than four weeks at the port of Mombasa and arrive in more than nine days in Kampala, mainly due to poor railways network.