Kenya - Magadi line
Posted: 01 Apr 2008, 16:05
In another post, Kevin enquired about the Magadi line. Here is an old article about the privatisation of this line.
Kenya's first private railway
African Business, May 1998 by Otieno, Barrack
Three years ago Magadi Soda Company was staring closure in the face. It confronted a consistent shortage of locomotive engines and hopper wagons, as well as crippling haulage tariffs from the Kenya Railways Corporation. It could not operate profitably despite the existence of a rapidly growing market for soda ash world-wide, simply because Kenya Railways could not ferry sufficient quantities of its product to the Port of Mombasa. Every year the company was losing up to 30,000 tonnes of soda ash sales.
These impediments and frustrations will, from 1 May, be history as Magadi Soda becomes the first company to operate a private railway system in the country. Eric Kinder, chairman of Brunner Mond PLC (British owners of the parent company), finalised the launch of the Magadi Railway Company by commissioning the first three of five Class 93 locomotive engines leased from the Kenya Railways Corporation and rehabilitated at a cost of Shs150m. The company received the first three locomotives at the beginning of the year with the other two expected to be commissioned at the end of April.
General Electric Company of the USA are rehabilitating a Class 47E shunter locomotive at a cost of $300,000. The shunter will be used for marshalling empty and loaded wagons between Mombasa railway yards and the Magadi Soda transfer shed. All the locomotives will be maintained by the GEC at its Changamwe workshops in Mombasa while the hopper wagons will be maintained at the Magadi railway yards.
The company has reconstructed the 150km Magadi-Konza line at a cost of Shs540m and assumed responsibility for its maintenance. Previously the line was barely maintained (at great expense) by Kenya Railways.
The unique tripartite partnership that achieved this represents a valuable model for Kenya as it moves into the new millennium. Through a series of contractual arrangements between Magadi Rail (which provided the financing, technology and training for the project), Kenya Railways (which contributed its vast infrastructure) and General Electric of USA (which provided the mechanical expertise for rehabilitating the equipment), some previously redundant machinery has become the core for Kenya's first private railway operation.
"We realised that we could only survive if we had our own railway," says Titus Naikuni, managing director of Magadi Soda Company. "Instead of sitting down and bemoaning our fate which often seems a typical Kenyan reaction in times of hardship, we stood up and did something about it." With this partnership underway, Mr Naikuni can finally set his sights on producing the long-awaited target of 350,000 tonnes of soda ash every year. The railway will also enable Magadi Soda to harvest 50,000 tonnes of salt annually for local livestock and industrial use. Mr Naikuni described the multifaceted agreements as an "everyone wins" scenario. "While the private sector complains about the inability of the public sector to perform, this project shows that with close cooperation, it is possible to turn around a loss-making business for both parties. Kenya Railways is now making money out of assets which they no longer have to maintain, and we are increasing our production. Rather than becoming a competitor of Kenya Railways, we're competing together against the road hauliers. The more cargo we can get onto the tracks the better!"
Magadi Rail already promises rich rewards. Where, three years ago, it took 16 days for a soda wagon to travel to Mombasa and back, it now takes six or seven; when Magadi Rail is fully operational, the `turn-around time' will be reduced to four days. The initial restoration of the hopper wagons has also increased their availability from 5080%. Although the recent economic slump in Asia has had some impact on Magadi's main markets, the prospects for the future remain solid, with upcoming markets in India, South Africa and the Middle East.
As well as strong support from within Kenya Railways, the project has been supported by key players within government, including George Mitine, who heads the privatisation unit in the Ministry of Finance, and the permanent secretary in the Ministry of Transport, Stanley Murage. Mr Naikuni believes Magadi Rail can serve as an important example of the benefits of decentralisation as well as the unrealised potential of Kenya's natural commercial flair.
Copyright International Communications May 1998
BNET
Kenya's first private railway
African Business, May 1998 by Otieno, Barrack
Three years ago Magadi Soda Company was staring closure in the face. It confronted a consistent shortage of locomotive engines and hopper wagons, as well as crippling haulage tariffs from the Kenya Railways Corporation. It could not operate profitably despite the existence of a rapidly growing market for soda ash world-wide, simply because Kenya Railways could not ferry sufficient quantities of its product to the Port of Mombasa. Every year the company was losing up to 30,000 tonnes of soda ash sales.
These impediments and frustrations will, from 1 May, be history as Magadi Soda becomes the first company to operate a private railway system in the country. Eric Kinder, chairman of Brunner Mond PLC (British owners of the parent company), finalised the launch of the Magadi Railway Company by commissioning the first three of five Class 93 locomotive engines leased from the Kenya Railways Corporation and rehabilitated at a cost of Shs150m. The company received the first three locomotives at the beginning of the year with the other two expected to be commissioned at the end of April.
General Electric Company of the USA are rehabilitating a Class 47E shunter locomotive at a cost of $300,000. The shunter will be used for marshalling empty and loaded wagons between Mombasa railway yards and the Magadi Soda transfer shed. All the locomotives will be maintained by the GEC at its Changamwe workshops in Mombasa while the hopper wagons will be maintained at the Magadi railway yards.
The company has reconstructed the 150km Magadi-Konza line at a cost of Shs540m and assumed responsibility for its maintenance. Previously the line was barely maintained (at great expense) by Kenya Railways.
The unique tripartite partnership that achieved this represents a valuable model for Kenya as it moves into the new millennium. Through a series of contractual arrangements between Magadi Rail (which provided the financing, technology and training for the project), Kenya Railways (which contributed its vast infrastructure) and General Electric of USA (which provided the mechanical expertise for rehabilitating the equipment), some previously redundant machinery has become the core for Kenya's first private railway operation.
"We realised that we could only survive if we had our own railway," says Titus Naikuni, managing director of Magadi Soda Company. "Instead of sitting down and bemoaning our fate which often seems a typical Kenyan reaction in times of hardship, we stood up and did something about it." With this partnership underway, Mr Naikuni can finally set his sights on producing the long-awaited target of 350,000 tonnes of soda ash every year. The railway will also enable Magadi Soda to harvest 50,000 tonnes of salt annually for local livestock and industrial use. Mr Naikuni described the multifaceted agreements as an "everyone wins" scenario. "While the private sector complains about the inability of the public sector to perform, this project shows that with close cooperation, it is possible to turn around a loss-making business for both parties. Kenya Railways is now making money out of assets which they no longer have to maintain, and we are increasing our production. Rather than becoming a competitor of Kenya Railways, we're competing together against the road hauliers. The more cargo we can get onto the tracks the better!"
Magadi Rail already promises rich rewards. Where, three years ago, it took 16 days for a soda wagon to travel to Mombasa and back, it now takes six or seven; when Magadi Rail is fully operational, the `turn-around time' will be reduced to four days. The initial restoration of the hopper wagons has also increased their availability from 5080%. Although the recent economic slump in Asia has had some impact on Magadi's main markets, the prospects for the future remain solid, with upcoming markets in India, South Africa and the Middle East.
As well as strong support from within Kenya Railways, the project has been supported by key players within government, including George Mitine, who heads the privatisation unit in the Ministry of Finance, and the permanent secretary in the Ministry of Transport, Stanley Murage. Mr Naikuni believes Magadi Rail can serve as an important example of the benefits of decentralisation as well as the unrealised potential of Kenya's natural commercial flair.
Copyright International Communications May 1998
BNET