RVR wooing investors in hunt for cash

The operator of the Kenya-Uganda railway has stepped up talks with several investors for capital injection after being served with contract termination papers over failure to pay concession fees.

Rift Valley Railways (RVR) failed to pay the Sh600 million fees for the year to December 2016 to Kenya Railways Corporation (KRC), missed cargo haulage targets and did not maintain railway assets as agreed in the 25-year contract.

KRC managing director Atanas Maina on Monday said that RVR now has a 90-day window to seek capital and put its house in order.

“They are talking to some parties who wish to invest in the consortium. That’s one way to get out of the situation,” Mr Maina told the Daily Nation without disclosing the suitors.

“Should they get the new investment, we will look into it and, in consultation with Uganda, take a stand,” he added.

This came after the Business Daily on Monday learnt that Kenya Railways had terminated the contract last Thursday.

The RVR is 80 per cent owned by Egyptian private equity firm Qalaa Holding with the remaining fifth controlled by Uganda’s Bomi Holding and international finance institutions (IFIs).

“The lenders can also step in and remedy the situation,” said Mr Maina.

The termination process was set in motion in January when Kenya Railways issued RVR with a default notice that was followed by a three-month notice of intent to terminate the contract, according to Kenya Railways.

The journey to termination gathered steam last month when Kenyan officials travelled to Kampala for a meeting with their Ugandan counterparts to assess RVR’s performance.

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