Rift Valley Railways pumps additional Sh6b to boost rail operations

Regional rail operator Rift Valley Railways (RVR) has completed the final draw down of $69.6 million (Sh6 billion) out of the $164 million (Sh14.3 billion) debt facility raised by several East African financiers to fund its five –year turnaround programme.

This comes as the construction works on the standard gauge railway continue, a move that will offer stiff competition to the meter gauge railway line, operated by the RVR.

RVR will also receive 20 locomotives this year as it completes the turnaround programme. Part of the proceeds will also be used to sustain investments in operating technology, cargo-carrying capacity and infrastructure including rehabilitating 366-kms of the Nairobi-Kampala section of the line.

Total capital expenditure this year will exceed Sh8.6 billion ($100 million), some of which will be used to add 1,400 wagons to the existing fleet. "The capital financing package was a mix of debt, equity and monies from internally generated profits," said RVR group Chief Executive Darlan De David. "We have so far invested $120 million in revitalising the railway, surpassing the investment requirement threefold, only midway through the investment period."

The $287 million capital financing package was provided in the form of loans comprising $40 million from the African Development Bank, $32 million from Germany's KfW Bankengruppe and $22 million from the International Finance Corporation (IFC).

The debt package also includes $20 million (Sh1.74 billion) from FMO (the Dutch development bank), $20 million from the ICF Debt Pool and $10 million (Sh870 million) from the Belgian Investment Company for Developing Countries.

Equity Bank provided a loan of $20 million. "Alongside a strong management team, the funding provided by these financial institutions has been key to turning around the fortunes of Rift Valley Railways," said Qalaa Holdings (formerly Citadel Holdings) Managing Director Karim Sadek.

In a recent boardroom struggle, Citadel bought out TransCentury and is now the majority shareholder in RVR with 85 per cent shareholding with Uganda's Bomi Holdings having 15 per cent.

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