State pulls plug on railway concession deal with RVR

Rift Valley Railways (RVR) will within a month’s time hand over the old railway network back to Kenya Railways (KR) after the termination of an 11-year-old concession.

In what could be the biggest public-private partnership failure in the country, RVR has been ordered to transfer its employees and assets to Kenya Railways within 30 days.

RVR in 2006 won the concession to run the metre gauge railway for a period of 25 years, in what was then seen as the biggest attempt to effectively utilise the 100-year-old railway.

Financial constraints

It has, however, been a decade of frustrations for both the owner and the operator of the railway. RVR has been unable to make major investments as was expected and at some point stopped paying concession fees to KR due to financial constraints, which resulted in the State firm issuing a notice to terminate the concession in April this year.

RVR had made attempts to negotiate with KR out of court but this seems not to have borne any fruit.

Yesterday, the two firms agreed to end the concession, according to a document they filed in the High Court in Nairobi. The two entities are expected to report to court on September 26 that the handover has been concluded.

“It is hereby ordered by consent that the concession agreement dated January 23, 2006 be hereby terminated today July 31, 2017... that the parties within 30 days effect the orderly transfer of employees and assets and agree on modalities of handing back of all property to Kenya Railways and Government,” reads the court document.

In a joint statement issued yesterday, RVR and KR also said they were looking forward to a smooth handover, but remained silent on what would happen to the assets and employees going forward. “KR and RVR will endeavour to ensure there is minimal adverse economic and social impact associated with the transition. We jointly wish to assure the employees, customers and stakeholders of our commitment to ensure smooth transition and continue operations,” said the statement.

The termination comes after the June launch of the Standard Gauge Railway. [Macharia Kamau]