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Friday, 22nd July, 2011
The Rift Valley Railways Investments (RVRI), the managers of the Kenya-Uganda rail network, earned $674,000 in the year ending June 30.
Brown Ondego, the RVRI head, attributed the earnings to the dedication of his team and the support from the shareholders.
“This is indeed a significant start to RVRI’s turnaround process,” he said.
Following a shareholder restructuring in mid-2010, the Citadel Capital now owns a 51% stake in RVRI via its Platform Company.
RVRI has a 25-year concession to operate the century-old rail line, with some 2,352 kilometres of track linking the Indian Ocean port of Mombasa in Kenya to the interiors of Kenya and Uganda.
“We are very pleased with the significant progress that RVRI management has achieved, operationally and in terms of the company’s bottom line,” said Karim Sadek, the Citadel Capital managing director.
“Throughout 2010, Citadel Capital and RVRI worked closely to implement a sustainable business plan and investment plan that includes a $287m-five-year capital expenditure programme to rehabilitate RVRI’s infrastructure and rolling stock.”
He said over the last two quarters, the firm witnessed significant improvements in the overall efficiency of the company’s operations, “which are beginning to have a positive impact on the company’s financial results, despite the fact that the financing package has not yet been finalised.”
The announcement follows on the heels of the African Development Bank’s (AfDB) decision last week to approve a $40m loan, as part of a bigger debt package that is expected to be signed in the near future.
The debt package, along with additional equity to be injected by the shareholders of RVRI, will go to support the rehabilitation of the Rift Valley Railways, which has been declared a top development priority for both Uganda and Kenya.
Transport prices in East Africa are among the highest in the world.
An efficient regional rail network could, in time, bring the costs down by as much as 35%.
“We welcome AfDB’s decision to assist in the financing of this promising turnaround story,” said Ahmed Heikal, the chairman and founder of Citadel Capital.
“The rehabilitation of the rail network in East Africa is vital to long-term economic growth prospects in the region.
“This loan will advance the upgrading of vital railway infrastructure, expedite the transition from roads to rail in terms of regional goods transportation and allow RVRI to improve on its passenger rail offerings.”
By Ibrahim Kasita: The New Vision Newspaper
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