Kenya Railways ends 25-year concession deal with RVR

Rift Valley Railways has 30 days to oversee the smooth transfer of assets and operations to Kenya Railways Corporation following the termination of a 25 year old contract to run the Kenya-Uganda railway.

The contract was terminated after both parties filed a consent order on Monday at the High court before Justice Grace Nzioka.

The Judge said that the two parties will ‘within 30 days effect orderly transfer of employees and assets and agree on modalities of hand back of all the property to Kenya Railways and the Government’.

“It is hereby ordered by consent that the concession agreement dated January 23, 2006 be and is hereby terminated today July 31, 2017,” read the order.

Since January 2017, Kenya Railways and Rift Valley Railways (Kenya) Limited have been involved in discussions to resolve the disputes that resulted in KR issuing a termination notice to end the Kenya Railways concession to Rift Valley Railways.

RVR has on numerous times defaulted on some of its loans amounting to Sh 2.7 billion. It has also breached a number of items in the concession agreement, including defaulting on fees payable to the governments of Kenya and Uganda.

In a joint statement, RVR Group Chief Executive Officer Isaiah Okoth and Kenya Railways managing director Atanas Maina said they have agreed to form a joint takeover committee that will “ensure a seamless hand back of operations and transfer of assets to KR, within 30 days”.

“During this time the joint committee will also engage clients and other stakeholders concerned, and will attend to pending and emerging issues to ensure minimal disruption to their services and business operations,” they said.

KR and RV also endeavoured to ensure there is minimal adverse economic and social impact associated with the said transition.

“We jointly wish to assure the employees, customers and stakeholders of our commitment to ensure a smooth transition and continued operations. We will continue providing regular updates and additional information as the process moves forward to its logical conclusion,” read their statement.

The termination process began in January when KRC’s MD issued RVR with a notice over unpaid fees and failure to meet set operating targets. In the contract, RVR was to pay concession or leasing fees to the Ugandan and Kenyan governments through KRC on a quarterly basis.

However, since January last year, the concessionaire has allegedly not paid the fees.

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