RVR targets planned Uganda-Sudan railway line

[John Ashworth]

RVR targets planned Uganda-Sudan railway line

Business Daily
By ALLAN ODHIAMBO
Posted Friday, August 5 2011 at 00:00

Rift Valley Railways (RVR) says it could invest in the building of a new railway line between Uganda and South Sudan in a bid to capture the expected huge flow of goods between Africa’s newest state and the East Africa region.

The new investment is being discussed by the two governments but Egypt’s Citadel Capital—which has a 51 per cent stake in RVR—says it would consider financing the project as an alternative corridor tapping opportunities in Sudan.

“We may consider financing the construction of a new railway between Tororo and Juba to open up South Sudan to the rest of the region,” Ahmed Heikal, Citadel Capital chairman told the Business Daily in an interview.

South Sudan, which broke from the north, has stated its intentions to find new trade routes for its oil as well as goods and services to cut its reliance on northern facilities such as its refineries and the only port as a gateway to international markets, opening a market for logistic firms such as RVR.

“It would be more viable to build a shorter railway that would be operational in a few years and spur trade in the region than go for an extensive one that requires many years to complete.”

The planned rail line from Tororo, eastern Uganda to Juba—the capital of South Sudan—is estimated at almost half the distance of the 1,200-kilometre Lamu-Sudan line.

The Kenya Government plans to implement an infrastructure project that could see the construction of a railway line connecting Juba through Lokichogio to the planned Lamu Port to serve the South Sudan market.

However, Citadel said the decision to link the Uganda line to Sudan will be reached in consultation with its partners in RVR—TransCentury and Uganda’s Investment firm Bomi Holdings.

The announcement comes days after the rail firm secured $164 (Sh14.7 billion) from a consortium of lenders to modernise the 2, 352km Kenya-Uganda railway, which RVR won a 25-year concession to run in 2006.

The money will be used to revamp 1000 locomotives, 3,500 wagons and the rail track in the quest to make rail the most preferred mode of transport for heavy cargo with the East African region.

This is emerging when the region has attracted increased investor interest with the optimism linked to the tapping of multi-billion shilling natural resource projects (oil in Uganda and Sudan) and the formation of the East Africa common market.

The surge in investments in the region will boost bulk freight numbers to and from the port of Mombasa, turning the railway into a key access route from the region to Europe, Asia and Middle East and with it ramping up business for the Kenya-Uganda Railway or RVR.

The rail firm posted a profit $674, 000 (Sh60 million) for the year ended June, after years of loss making and a drop in customer numbers, but a revamp coupled with expected surge in traffic could reverse its fortunes.

Meanwhile, the Egyptian PE fund has announced its intention to introduce ferries and vessels in Lake Victoria targeting the landlocked countries of Rwanda and Burundi as well as Western Tanzania.
Its investments in Sudan include large scale farming in rice, wheat, maize and sorghum, oil exploration and mining.

“The railway is the main artery for the territory (East Africa) and they are investing in it purely for the possibility of higher returns and profits that are will come with a well-run railway,” says Auroeus Capital, adding that it will also support Citadel’s investments in the region.

Citadel seems to be borrowing from the investment manuscript of French Investment firm Bollore group, which controls the entire transport chain in five West Africa nations from sea ports to railways and freight forwarding.

This has not only allowed the French firm to rake huge returns from the entire transport chain but support its agricultural production subsidiaries in the form of cheap and guaranteed logistic corridors.

aodhiambo@ke.nationmedia.com