By Leo Odera Omolo.

A high level meeting of business executives recently held in Kigali was told that serious challenges facing the EAC region include infrastructure development, especially railway transport.

The issue topped the agenda during a series of meetings when it was disclosed that the railway lines connecting all the member states of the EAC are obsolete and require major overhauling work..

The lines have declined due to stagnated infrastructure development after being starved of capital development fund by governments and loaning agents compared to roads, according to Mr. Philip Wambugu, the director of planning and infrastructure in the EAC.

“New standard gauge railway lines that support future transport requirement for the region must be built irrespective of whatever level of investment is put into it, said Mr. Wambugu.

The preferred option is replacing the existing metre gauge and adapting the new gauge for new railway construction projects in the region.

Standard gauge railway is the railway for the 21st century as it meets stringent commercial transport requirements in most developed countries, including the US and Canada where it is used as land bridge between the pacific and Atlantic Oceans.

Timing construction of standard gauge railway should start immediately for operations to be in place by not later than 2020, said Mr. Wambugu. A standard gauge railway measures 1,435 mm, compared with 1,000 mm for the current Mombasa-Kampala-Kasese mainline.

The railway track would require only normal maintenance, compared with the road, which will have been rebuilt at the end of its five-years life cycle while handling much less traffic.

The wider gauge permits higher speeds and higher rolling stock carrying capacity.

The example was given of India, a country which operates a mixed traffic with broad gauge railway on which it runs double stacked containers and is planning for triple stacking. “Locally we are carrying one container per wagon on an inefficient and costly operation,” said Mr. Wambugu.

Because the standard gauge railway technology uses standard equipment, it is easily accessible, cheap, well designed, easy to operate and maintain. And because the line uses higher capacities for freight and passengers achievable with higher speed, higher axle-loading and higher frequency of trains, the performance is much better.

Standard gauge railway also allow faster transit times, which translates to less time spent by the railway authority guarding freight and passengers, hence less insurance burden.

To replace the existing metre gauge with standard gauge in the region, EAC partner states need to establish an EAC investment Company or fund that must be heavily popularized and publicized to investors in the infrastructure sector.

To achieve this, multiple contractors must be commissioned in order to speed up construction of railway lines. Creating a network of African Companies who are experts in Infrastructure fields, who in turn will undertake infrastructure development projects at reasonable cost-to suppress inherent monopoly of supply of this services from multinational companies. This can be done through the build and transfer projects.

Mr. Wambugu said regional business communities are sufficiently sophisticated and should wholly participate in the project.

Meanwhile the Rift Valley (RVR) in Kenya is likely to go burst.

The entity contracted more than a year ago by the Kenya and Uganda governments to temporarily own and run the 900 kilometer railway connecting the Kenyan port of Mombasa with land locked Uganda under a 25 –year concession, would appear to be worsening by the day.

The troubled company has been holding intense consultations and discussions with two international Companies on what is confidentially reported as a rescue plan that include transfer of management and equity to these foreign investors.

Kenyan parliamentarians were recently vocal demanding that the government should unilatery revoke the agreement and allowed the railway to revert to the Kenya railway Corporation (KRC).

The first inline of active negotiations is a consortium led by Australian Company, Toll Holdings Ltd. And that includes a UK-based Equity fund by the name PM Africa Infrastructure Opportunities PLCLPME.

The second, according to a page one headline in this week edition of the EAST AFRICAN is a consortium led by a British Company by the name opting management ltd. That is rumoured to be linked to Magadi Soda.

Two weeks ago the two groups both presented proposals on how the troubled Company can be turned around to an inter-ministerial committee heated by the office of the Prime Minister. Until recently, to government officials and MPs appeared to be leaving towards the Australian proposal, which includes a USD 40 million capital injection into RVR by PME.

At the same workers at the RVR resumed work early this week after a strike over delayed salaries was called off.

The ten day strike paralyzed operation at the railway leading to a pile up of cargo at the port of Mombasa, and affected business in neighbouring industries in the region covering rift Nyanza and western provinces have suffered losses of revenue worth estimates of Kshs. 500 million. Manufacturers in the region have had to resort to the more expensive road transport.

ENDS

leooderaomolo@zahoo.com

– – –
Date: Thu, 17 Jul 2008 06:42:47 -0700 (PDT)
From: Leo Odera Omolo
Subject: UK AND AUSTRALIAN FIRMS IN QUIEIT BID TO TAKE OVER THE INSOLVENT KENYA RAILWAYS FROM RVR.