East Africa: RVR Deal Cancelled

[John Ashworth]

East Africa: RVR Deal Cancelled
Aggrey Nshekanabo
14 February 2009

Malaba, Kenya — Uganda Government has gone to court as a means of cancelling the Rift Valley Railways (RVR) deal for failure to fulfill its mandate of facilitating business.

The Uganda Minister of State for Works, Eng. John Byabagambi told East African Business Week last Friday that government has won round one by taking the matter to court and had been given a green light by court to cancel the concession given to RVR. Sources in Kenya told EABW the Kenyan government cancelled RVR's concession without the burden of going to court while Uganda has gone to court and been given a go ahead to cancel the concession. Since the advent of Rift Valley Railways not more than 15% of the cargo destined for the hinterland from Mombasa is handled by rail.

According to the minister, this has caused the cost of doing business to rise and consequently, the price of goods to go through the roof. Currently, transporting a 40-unit container wagon from Mombasa to Malaba border post costs around US$100,000 by rail while by road, a similar unit would be over US$150,000.

"I agree with the business community's concerns. The inefficiencies at RVR have raised the cost of doing business and that state of affairs is absurd. However, I would wish you to state that even if the rail network was working 100%, railway would not handle all the cargo destined for Uganda, Rwanda, Burundi, Democratic Republic of Congo and the Sudan. We would still use road," the minister said.

In the present situation, a lot of pressure has been put on the road and the Kenya Roads Authority has banned trucks of over three axles because they have been damaging the roads.

In fact, all vehicles with four sets of hind tyres (4 axle) cannot ply on any of Kenyan roads and what the truck drivers have done is to remove the fourth axle.

Transporters are saying that a truck that previously carried 50,000 litres of petrol now carries 30,000 litres at the same cost as it was when using four axles. This has been one of the reasons why fuel prices and commodities are rising in the hinterland.

The road network now handles about 85% of all cargo destined for countries west of Kenya. This has resulted in further damage of the roads in Uganda yet if the rail system including the water transport were working less impact would be felt on the road.

"We have been disappointed by RVR and we want them to leave so that a competent person comes in to run the railway. We are aware rail is supposed to handle 85% of all in-coming cargo and only 15% by road. We can never be comfortable with the present situation," Byabagambi charged.

Every week, RVR brings in 1,500 containers that cross to the Ugandan border yet rail should at least bring in 10,000 containers.

Inside sources at Malaba, Kenya intimated to EABW that the reason why there are few containers crossing to Uganda is because RVR has few locomotive engines and only one to three trains cross to Uganda per day.

A source at RVR Kenya that demanded anonymity said some locomotives that were serving the Magadi route for soda ash destined for export will be diverted to serve the Ugandan route because the demand for soda ash for export has greatly reduced because of the credit crunch.

The Rift Valley Railways Consortium (RVRC) was established to manage the parastatal railways of Kenya and Uganda. The consortium won the bid for private management of the century-old Kenya-Uganda railway in 2006. RVRC is led by Sheltam Rail Corporation of Sheltam Trade Close Corporation (STCC) of South Africa that claimed had experience with management of railways. Minor partners of the consortium are Kenya's Prime Fuels (15%), Mirambo Holdings of Tanzania (10%) and Comazar (10%) and the CDIO Institute for Africa Development Trust (4%), both of South Africa.

The consortium had promised to invest in the railway system, upgrade it, reduce inefficiencies, utilize a smaller work force and generate a yearly concession fee of 11.1% in each country. The joint concession was to last 25 years.

Copyright © 2009 East African Business Week. All rights reserved.
Distributed by AllAfrica Global Media (allAfrica.com).

[John Ashworth]

I posted this on East_African_Steam and an interesting and very informative conversation developed.

If I'm reading this correctly and, that a "40-unit container wagon"
actually means a 40 wagon, train of (20 foot) containers" it costs
$2500 to haul a container by rail from Mombasa to Uganda.

US 25 Million in potential revenue per week?

And, that there are 10,000 such containers to move every week?

At 40 wagons per train that is 36 trains a DAY on the single track
main line.

Who's kidding who here?

Even if the 10,000 containers is really 5,000...18 trains a DAY one way!

Agreed, Tevor. I think it's a badly written article which contains some
very dubious background information. One can only assume that the basic
headline material is correct... or maybe not?!

No, I don't think the headline is correct at all. My reading of this and other
recent press reports is that KRC (and URC as well it seems - thanks for that
report John) have made an initial attempt to cancel the concession, I think it
was in November last year, on grounds of non-performance. The Kenyan high court
recently disallowed an attempt by RVR to have KRC's request thrown out. But that
does not mean that the concession is cancelled, or that that KRC/URC will
succeed in doing so. The IFC retained international lawyers with specific
concessioning expertise to draft the agreement and I believe it will bind the
governments of both countrys tightly. Any attempt to repudiate it would ruin
their creditworthiness with external lenders.

KRC will have to prove non-performance, and I think that will be difficult,
since as far as I remember the concessioning agreement set targets to be
achieved after five years - not after little more than two. RVR has been
dilatory in paying their fees but will doubtless claim force majeure from the
unrest in January 2008. I would also guess the IFC (World Bank) will not want to
lose face by seeing their flagship concessioning project go belly-up, and will
be putting pressure on behind the scenes. I'd guess it's a beanfeast for the
lawyers.

A story moved in the Kenyan press earlier this week claiming that RVR were
making progress in finding new funding from European venture capital groups. It
was a bit short on credible detail so I didn't post a report here, but it does
show that their recapitalisation attempt isn't dead.

Graham,

What are your thoughts on how many trains that line can actually handle?

What do you think is the real number of containers that have to be
moved weekly?

Container volumes are usually measured in TEUs or "twenty foot equivalent
units" so the phraseology used is indeed confusing; obviously a 40 wagon
train would carry 80 twenty footers. So 10,000 x 20' containers would
require half that number of wagons which equates to 125 trains per week or
as Trevor says almost 18 a day one way.

In days gone past, tonnage moved depended on motive power available,
trailing load, and the number and lengths of passing loops.

Assuming an average 20' container gross weight of 16 mt, total net train
weight would be in the order of 1300 mt. for 40 wagons. I am not sure what
the empty wagon would weight be, but say 20 tons tare. That would be 52 mt
per wagon gross or 2080 mt total. I am sure that is well within the
capability of present diesel power. Passing loop length shouldn't be a
problem for accommodating 40 wagons.

There must be almost thirty passing loops between Mombasa and Nairobi with
slightly more between Nairobi and Malaba, therefore there should be enough
loops to allowing for passing.

I guess the main problem would be the number of available locomotives to
haul 36 trains a day.

Anyway, thought I would throw in my five cents worth!!

Nigel,

Thanks for correcting the number of containers per train.

Assuming class 93 and 94 only

Here is the motive power from Grahams earlier posting.

93 class:

Available: 01,03,04,05,06,08,10,11,13,14,15,16,17,18,19,23,24,26.

Awaiting spares: 12,20,22,25.

Awaiting accident repair: 02,07,09.

94 class:

Available: 01,02,04,05,06,08,09.

Awaiting spares: 03,07.

Awaiting accident survey: 10.

So 25 total active and 6 more waiting spares

31 locos for 18 trains up and 18 back per day......that's just the
container traffic then there is of course the fuel trains, Soda ash
and the odd passenger train to path.

The original report of course discussed loco availability including
drafting locos back into regular service from Magdi work.

Any attempt to move this much traffic though is going to require a
visit from the loco salesman..

Thanks Trevor and John for kicking this off and Nigel for bringing
some clarity to the capacity and loading. I must admit I had no idea
of the answer but I have done a bit of digging and this is what I
found.

The annual capacity of Mombasa port is said to be 600,000 TEU. In
2007 (the last year I could find figures for) 282,000 TEU were
imported, and slightly fewer exported. (The new Kipevu terminal
financed by Japan and planned to be built between 2010 and 2015 will
double the capacity, by the way).

So this would mean a monthly figure of 23,500 TEUs imported (maybe a
bit less since the dip in the Kenyan economy after the 2007/8
crisis). Storage at the Kilindini container terminal is a bottleneck.
Its capacity 14300 TEU but it is overloaded: in Dec 2008, it held
17000 TEU and from February to April 2008, after the crisis
restricted upcountry movement, the figure was more like 19000 TEU. In
mid-January 2009, 6000 containers with completed documentation had
been waiting more than a month for uplift.

A fairly widely quoted figure in the press for current railage of
this total import traffic is 6%, so I'm assuming this translates to
1410 TEU a month. The railage said to be sufficient to deal with the
congestion is 30%, or 7050 TEU a month.

So much for the theoretical traffic offered. On the ground, I'm told
container trains typically run from Mombasa to a single destination
without change of locomotive apart from Uganda-bound trains, which
change locos at Malaba or Tororo depending on availability. (Ugandan
locos sometimes work into Kenya as far as Eldoret).

Up trains on the Nakuru-Kampala section are loaded to 35 bogies (70
units in railway parlance - this doesn't refer to the number of
containers but is the normalised vehicle count for braking
calculations by train crews, rather like the old UK "equal to n"
style). The Up load is 1000 tonnes. Down trains are also limited to
35 bogies/70 units but can be loaded up to 1200 tonnes. I'm not sure
if Mombasa-Nairobi trains have higher loadings, but I don't think so.
Kisumu branch trains are 12 units (6 bogies) loaded to 350 tons.

The Mombasa-Nairobi section has a theoretical capacity (timetable
paths, I suppose)for over 15 trains a day but currently handles 8 to
10. This includes the passenger train and Magadi traffic. Nakuru-
Kampala capacity is 8 trains a day, but currently they run 5 or 6.
There are over 15 crossing points, I'm not sure exactly how many, but
RVR closed a number of smaller station in the interests of economy so
there are significantly fewer than in EAR days. Nakuru-Kisumu
capacity is 10 but they only manage to run 2 to 3, including the
passenger train.

The limiting factor, by the way, is said not to be loco or wagon
availability, but poor track condition requiring reduced speeds.

As far as I can see from various photos of container flats, they all
have a load of 40 tonnes and a tare varying between 12 and 15 tonnes,
so Nigel's estimate of 52 tonnnes is spot-on. But a 35-bogie train
loaded to this capacity would weigh 1820 tonnes, and as I stated the
actual maximum permitted Up load is 1000 tonnes. Some wagons will
therefore have less than two containers.

I have photos of some containers loaded singly on bogie wagons, eg
carrying bitumen. I don't know if this is because they are over 20
tonnes or for safety reasons. I remember many of the derailments in
2006 were due to a combination of poorly-maintained container flats,
bad loading (securing dogs not fastened properly for example), and
spongy track: a container would bounce towards the edge of a wagon,
unbalancing it, and it would then derail and take the rest of the
train with it. So maybe they are forced to load some wagons below
capacity.

A 35-bogie train will therefore have a tare of about 480 tonnes and a
load of about 520, which using Nigel's figure for gross container
weight of 16 tonnes means 32 or 33 containers per train. This would
mean between 160 and 200 containers by train daily into Uganda, say
1400 on a good week. This tallies with the figure of 1500 containers
a week quoted in the press article John posted.

It doesn't tally, however, with my estimate of 1410 TEU railage out
of Mombasa a month (based on 6% of total imports), because this
includes traffic to Nairobi (which is very broadly 50% of total) and
whatever the Kisumu traffic is (30 or 40 containers a day if you
assume the trains are of containers only, but in January 2009 the
trains I saw typically had five covered bogies and only two flats
each with one container). The actual railage I would guess to be more
like 3000. I'm not sure why this is. I think perhaps the 6% figure
quoted widely in the press is too low. Or have I goofed somewhere in
confusing containers and TEUs?

The Kenya Ports Authority website has very detailed daily performance
figures on railage but they seem to be expressed as containers rather
than TEUs and there do not seem to be any monthly or annual reports.
I haven't (yet) managed to make much headway with them but others may
care to try!

Anyway - for me, the most interesting aspect of this is that the
track condition is the limiting factor. As I mentioned in a previous
report, all the permanent way I saw in January was weed-infested to a
greater or lesser extent. I asked a friend in Kenya recently why this
hadn't led to extensive damage from washouts and he pointed out that
the country is still in the grip of a severe drought. RVR are said to
be pushing forward with an urgent track repair programme (although I
wonder how much they can do without new capital investment). They had
better hope to complete it before the rains come.

[John Ashworth]

Another gem from East_African_Steam:

Graham

Many thanks for your very interesting insight into present day rail
operations in Kenya and Uganda.

It would be interesting to know how many units travel by road and what the
difference is cost wise between road and rail. I assume that road
transportation in East Africa is unregulated so fierce competition must be
the order of the day.

It is rather sad to see how far the rail infrastructure has deteriorated.

I know this is irrelevant to this thread but I can't help looking back and
comparing what used to be possible on this line with very different
equipment.

Fifty years ago the EAR quite easily moved 10,000 ton trailing loads daily
in each direction between Mombasa and Nairobi with nine trains hauling
around 1100 tonnes each. That didn't include two passenger trains each way
plus what ever local traffic there was such as that from Magadi; so say 12
trains in each direction per twenty four hours.

Maximum trailing loads were 1200 tonnes but were sometimes exceeded when the
need arose; up to 1400 tonnes was the maximum with train lengths up to some
60 wagons.

I believe there were some 35 crossing loops then, but as you say, many of
those will have been lifted.

The bottleneck and limiting factor on line capacity then was the eight and a
half mile steeply graded section between Kiu and Ulu which was 1:66
throughout. 59 class Garratts were booked to do this section in 33 minutes,
at a steady 15 mph!!