First batch of train locomotives arrive since 1987

The first batch of locomotives for East Africa’s fledging railways transport sector have arrived ending a long wait of over two decades wait since 1987.

The first three of the 20 locomotives that the Rift Valley Railways (RVR) has acquired have docked at the port of Mombasa. A total of 17 more are expected by May 2015, in what is positive news for railways transport.

Africa Railways, a core subsidiary of African infrastructure and industry leader Qalaa Holdings (CCAP.CA on the Egyptian Exchange; formerly known as Citadel Capital), that runs RVR has announced that the locomotives were secured through a US$ 20 million (sh1.8 billion) asset financing deal with Standard Bank of South Africa and CFC Stanbic Bank towards.

The acquisition of the 20 locomotives from the USA will combine with the locomotives that are being rehabilitated in the rail operator’s Nairobi workshop. When added up, the mainline RVR locomotive fleet will be doubled.

“We view RVR as an ongoing success story,” said Qalaa Holdings Managing Director, Karim Sadek. “Securing a commercial financing deal of this nature is a vote of confidence in the turnaround of the railway system in the East African region.”

 The new locomotives will allow RVR to significantly ramp up freight volumes as the ongoing wagon rehabilitation in Nairobi and Kampala will bring RVR’s total number of wagons to 2,400.

In the deal, Standard Bank will cover 80 percent of the cost of the locomotives.

“Insufficient locomotive power is the single biggest obstacle preventing a step change in the amount of volumes we transport,” said RVR CEO, Carlos Andrade. “This new financing not only alleviates the bottleneck but is also a vote of confidence by a major international lender in our operations.”

According to Standard Bank, rail asset deals of this scale remain relatively rare in East Africa.

“Asset backed financing is premised on projected cash flows of the asset being financed. Our due diligence on RVR gave us confidence that this investment proposal will indeed generate the revenue streams required to service the loan,” said Kwame Parker, Head of Power and Infrastructure East Africa for Standard Bank.

In about two years, Qalaa has pumped 287 million US dollars in modern rail operating technology, rebuilding infrastructure, expanding haulage capacity and developing modern rail operating skills in Uganda and Tanzania.

Transportation & logistics is one of Qalaa Holdings’ core industries along with energy, cement, agrifoods and mining.


 

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