News

Uganda: Governement Throws Out Rvr, Takes Over Railway Assets

The ministry of Finance on Thursday threw out Rift Valley Railways (RVR) from management of the metre gauge railway line and instructed Uganda Railways Corporation (URC) to take charge of the facility.

The decision followed a meeting on the same day at Ministry of Finance offices in Kampala where government resolved to end all ongoing discussions to salvage RVR's concession on grounds that it had failed on all the conditional demands.

The government first terminated the concession in October last year, which prompted RVR to seek legal redress.

However, after a series of court appearances, the government in December last year agreed to withdraw its notice of termination and requested the beleaguered concessionaire to withdraw its arbitration proceedings to allow room for talks.

Finance minister Matia Kasija, in a January 25 letter to RVR's executives, said: "It is clear that there is an absolute failure and refusal to perform or continue with performance of your explicit and critical contractual obligations."

"This amounts to a fundamental breach of the concession agreement which has effectively deprived government of Uganda and URC of substantially the whole benefit of what they were to receive under the concession agreement," the letter, copied to among others, Attorney General William Byaruhanga and Works and Transport minister Monica Ntege, reads in part.

Mr Kasaija instructed RVR to provide a detailed account of the conceded assets by end of next week.

Accusations

Following the December withdrawal of the court proceedings, the Finance ministry and RVR had agreed on a number of terms.

But in a Thursday letter Mr Kasaija said RVR had failed to pay staff salaries on time, failed to avail an insurance policy to determine whether the insurance coverage meets the conditions set in the concession agreement, failed to guarantee a performance bond, failed to submit audit and annual reports for the last three years, and failed to put in place security to protect the railway assets which have been seriously vandalised.

RVR, the Uganda-Kenya railway concessionaire owned by Cairo-based Qalaa Holdings, has a host of problems; mostly financial and managerial, in the recent past which prompted the governments to start mulling terminating the concession, which was originally set to run until 2030 from 2006.

The railway line is 1,300km from Kampala to Mombasa, with 1,000km in Kenya and 300km in Uganda. As a result Uganda accounts for 75 per cent of RVR revenues while Kenya accounted for 80 per cent of the total costs due to the distance.

The decision to terminate RVR by both countries was mooted in 2016. Kenya, then ended its contract with RVR in August last year.

In a previous interview with this newspaper, the managing director of Transportation at Qalaa Holdings S.A.E, Mr Karim Hassan Sadek, said the concession failed because the two countries had failed to support the "logistical eco-system" that led to problematic railway operations.

"A railway operates a logistical eco-system which was and is in the hand of the two governments, such as the port at Mombasa operated by Kenya Ports Authority (KPA), customs under Kenya Revenue Authority (KRA) and Uganda Revenue Authority (URA), but unfortunately they were all reading from different scripts," Mr Sadex explained.

By: Frederic Musisi

Source:The monitor

I-ARB Africa is a product of African Legal Solutions.
Copyright © 2017 African Legal Solutions / Design By Resolution Studio