Rift Valley Railways contests Sh335m Shell debt demand

By Nancy Akinyi

Rift Valley Railways (RVR) Kenya Limited risks being wound up over a Sh335 million debt, if a petition by Kenya Shell succeeds.

Commercial Court Judge Luka Kimaru has allowed Kenya Shell to institute winding up proceedings against RVR over the firm’s inability to pay the debt.

In his ruling, Justice Kimaru maintained that RVR admitted owing a debt amounting to millions of shillings, but was unable to pay within three weeks after a demand was given.

Reputation

The Judge said if a demand is not honoured within three weeks, then the affected firm could be cited for winding up.

He maintained that RVR ought to live up to its reputation, and the responsibility it is entrusted with of operating the only railway line in the country.

"The fact that RVR operates the country’s only railway line, is the more reason why it should pay its debts," said Kimaru.

The dispute is over assorted lubricants and diesel supplied to the railway company between December 2007 and July last year. But, RVR through advocate Kithinji Marete, wants the winding up notice dismissed on grounds that it was rushed to court, before the parties could seek arbitration as required in such contracts. He told the court the petition was in bad faith, as it was intended to coerce his client to pay a disputed debt.

Marete argued that as a result of last year’s post-election violence, extensive damage was caused to the railway infrastructure, which made it lose millions of shillings. He estimated the losses at over Sh300 million.

But, the oil marketer, through advocate David Majanja insisted that if RVR cannot pay its debt then it should be wound up.

"There is no special legal provision that because RVR offers special services to the public it should be dealt with in a special way,’’ he said.

Majanja urged the court to allow the winding up petition because RVR admits owing a debt, which it is unable to pay.

RVR Executive Chairman Brown Ondego swore an affidavit in which he said the claim of Sh335 million was exaggerated and that the firm only owed Sh 21 million.