Regional rail operator, Rift Valley Railways has completed the final drawdown of US$ 69.6 million of the US$164 million debt facility which it raised through leading global and East African financiers late in 2011 to fund its five-year turnaround programme.
The debt was part of the total $287 million capital financing package which was provided in the form of a series of loans comprising $40 million from the African Development Bank (AfDB), $32 million from Germany’s KfW Bankengruppe and $22 million from the International Finance Corporation (IFC).
The debt package also includes $20 million from FMO (the Dutch development bank), $20 million from the ICF Debt Pool and $10 million from the Belgian Investment Company for Developing Countries (BIO).
From the private sector, Kenya’s Equity Bank provided a loan of $20 million.
“Alongside a strong management team the funding provided by these financial institutions has been key to turning around the fortunes of Rift Valley Railways,” said Qalaa Holdings managing director Karim Sadek.
“A portion of the proceeds from the drawdown will be used to sustain investments in operating technology, cargo-carrying capacity and infrastructure including rehabilitating 366 kms of the Nairobi-Kampala section of the line. Total capex spending this year will exceed US$ 100 million, some of which will be used to add 1,400 wagons to the existing fleet.
RVR’s group CEO Darlan De David said, “The capital financing package was a mix of debt, equity and monies from internally generated profits. We have so far invested $120 million in revitalising the railway, surpassing the investment requirement threefold, only midway through the investment period”.
Since the start of the capex investment and turnaround programme in January 2012, RVR has completed the rehabilitation of 73 kilometres of railway track between Mombasa and Nairobi. Along with installation of GPS-based train operating technology on all trains, this helped cut cargo transit times between the two cities by six hours.
Freight clients in particular are benefitting and taking advantage of what Sadek called “more investment in revitalising the Kenya-Uganda railway system in the past 26 months than in the previous 26 years,” with high-profile companies in the steel, oil and bulk grain businesses signing new contracts amid improved speed, reliability and safety records along the railway line.
Darlan said the region’s transport sector will experience a significant reprieve on cargo haulage this year once RVR augments its locomotive fleet with the additional 30 trains it is acquiring.
“We procured and will soon be receiving 20 of these General Electric locomotives from the US; we are rehabilitating the rest in our workshops locally,” he added.
Apart from the increasing haulage capacity, RVR is on track to meet railway line maintenance standards and has acquired modern track maintenance technology that will automate and speed up the process.
“The total capex spending this year will exceed more than 100 million USD” Qalaa Holdings managing director Karim Sadek said.
AUTHOR:BEN GUMO AND SOURCES