RVR receives first batch of locomotives

railway train

Nairobi; Kenya: Rift Valley Railways has acquired three of the expected 20 locomotives from the US firm General Electric to ramp up freight volumes and movements in the region. The three locomotives arrived in Mombasa last week, with full delivery expected by April next year.

The move comes after RVR secured Sh1.8 billion for the purchase of the locomotive engines from Standard Bank of South Africa and CfC Stanbic bank.

RVR Chief Commercial and Marketing Officer Andreas Heineil said the first three of the twenty locomotives arrived at the port of Mombasa from the US and were shunted and driven to RVR's Changamwe marshalling yard. "Insufficient locomotive power is the single biggest obstacle preventing a step change in the amount of volumes we transport," said Heneil.

He said Standard Bank of South Africa will be providing Sh1.8 billion ($20 million), or 80 per cent of the price while RVR will provide the remainder of the Sh2.2 billion ($25 million).

He said the new locomotives would be fuelled and well lubricated before they start working in two weeks' time. "This new financing not only clears this bottleneck but is also a vote of confidence by a major international lender in our operations as it is premised on revenues to be generated by the trains," said Andrade.

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When added to locomotives being rehabilitated in the rail operator's Nairobi workshop, the trains will double RVR's mainline locomotive fleet, increasing its freight haulage capacity in Kenya and Uganda.

He said the ongoing wagon rehabilitation in Nairobi and Kampala is expected to bring the number of wagons to 2,400, more than double the current fleet, by June next year.

RVR recently unveiled a Sh25.8 billion strategic plan to increase its cargo capacity five-fold by 2018. The firm contracted to run the 1,400km line between Mombasa and Kampala under a 25-year deal, said the plan that will see its cargo business increase from the current annual capacity of a million tonnes to five million tonnes in the next five years.

According to RVR, the plan involves buying new locomotives and wagons while rehabilitating the existing systems. The firm is planning to overhaul 14 locomotives over the next two years. It is also hoping to rehabilitate 1,000 wagons while overhauling 2,200 more.

Earlier this year, investment firm TransCentury sold its 34 per cent stake in RVR in a deal estimated to be worth Sh5 billion, ending its seven-year investment in the business.

The sale to Citadel raised the Egyptian firm's stake in the railway concession to 85 per cent, leaving Uganda's Bomi Holdings as the only other investor in the railway operator with a 15 per cent stake.

TransCentury's said it had made the decision to maximise shareholder value and that it remained positive about the fundamentals of RVR despite the historic challenges the business has faced.

"We are actively exploring other possible ways to work together with Citadel Capital to support RVR and maximise value for all stakeholders," said TransCentury Chief Executive Gachao Kiuna in a statement.