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There is more afoot in the Government’s 14-day RVR deadline

By | January 19th 2010

By Peter Okong’o

The deadline on RVR shareholders to resolve their differences within 14 days is unrealistic.

There appears to be other undercurrents informing the Government’s move that have nothing to do with finding a sustainable and effective alternative to the joke that is the RVR Consortium.

You do not ask shareholders, who were previously unable, or unwilling, to invest a single cent in the railway, to resolve their differences, and pay $250 million dollars (Sh19 billion), unless you have already set in motion an alternative and credible plan.

So what is the Government up to? So far, none of the shareholders in the consortium can honestly claim to have fulfilled their side of the deal.

If anything, the Kenya-Uganda railway is facing more problems today, than before the concession was drawn up and signed.

These problems cannot be resolved by sending alarming signals to investors that the Kenya and Uganda Governments are unable to look at issues rationally.

The best solution is to declare the current deal "dead on the table", and re-tender for new investors with proven ability to manage and turn around failing strategic infrastructures.

Tighter rules

They should come in under tighter rules, and without exit clauses that leave taxpayers holding unwarranted bills.

According to an informed source at the Ministry of Transport, the Government may have struck a deal with some of the key investors in the consortium, and the 14-day ultimatum is merely a ruse.

What is the Government’s real intention here? Why give a deadline of 14 days? Why not 15 or 30 days? The point I am making is that this deadline was deliberately designed to be obstructive.

It was certainly not established by calculating the processes needed to raise capital, and complete negotiations with shareholders successfully. It seems it was meant to fail, so that investors favoured by the Government get the upper hand in new "negotiations".

Information from inside the consortium indicates that all, but a minority of the shareholders of RVR, accepted a restructuring plan proposed by the Governments of Kenya and Uganda.

Are these Governments making a decision in the best interests of the people of East Africa? Perhaps both Governments are now generously assuming responsibility for investing the necessary $250 million in RVR?

If that is the case — and taxpayers in both countries will foot the bill to cushion "investors" who have been less than willing to put in a single cent — then there is reason to be worried.

This is much bigger than just the RVR concession. It brings to light issues hindering real economic growth in Kenya, and the Government’s questionable approach to attracting much-needed private funding of strategic public infrastructure.

Stakes too high

The stakes are too high for the Government to allow RVR to fail. Given the lack of openness with which it is handling things, Kenyans cannot be blamed for being cynical about its intentions.

What the Government is failing to acknowledge is that the decisions it is making around RVR are not just impacting the socio-economic future of Kenya, but also the future of the regional bloc.

If a new deal fails, and has to be re-tendered, no credible investor will touch the project unless it is transparent, which means we will be stuck with outdated infrastructure that does not meet our needs.

Millions inconvenienced

Hundreds of millions of East Africans are being inconvenienced and impacted by a handful of people taking boardroom decisions to the corridors of power.

Entrepreneurs in the region are already gearing up for the expected boom in intra-regional trade, occasioned by the commencement of the EAC Customs Union, and it is their expectation that Kenya will ensure, as a priority, the development of a logistical corridor to support this.

If RVR is not turned around, East African businesses will remain stifled by clogged up roads keeping costs of goods higher than they need to be.

The solution is not imposing "fake" deadlines, but working with investors willing and able to put money on the table, instead of just talking about it.

We need and deserve better. Our Government should listen to the people across East Africa, and ensure that this critical venture is delivered.

The writer is the Deputy Managing Editor, Economics and Business Analysis. [email protected]

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