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We will build a modern railway system, says RVR boss

Sammy Gachuhi is the acting general manager of Rift Valley Railways (Uganda). He talked to Michael Mubangizi following our recent article (Workers want govt action on railways) and shed more light on the state of affairs in the railway industry. Excerpts:

What’s your response to the views and remarks expressed in our recent article about the Rift Valley Railway (Uganda) that touched on the tale of dwindling revenue and low staff morale?

We have looked at the article and there are a number of issues that we feel are not reflective of RVR as a business at the moment. These include issues related to corporate governance, maintenance of assets especially the buildings, the state of the culverts and issues to do with our HR manager memo to staff plus information you quoted from the minister of Works [and Transport].

First of all, the RVR concession was initially signed in November 2006; between then and 2008 Sheltam of South Africa was in charge of managing the concession with a 34% shareholding. However, due to the poor corporate governance, the concessioners, the Governments of Kenya and Uganda, decided that there was need for change and this came in August 2010 when new shareholders came on board. These were Citadel Capital of Egypt, (51 %,) TransCentury, of Kenya (34%) and Bomi Holdings of Uganda with 15%.

These new shareholders found that RVR actually required $287m to rehabilitate the assets, meet its obligations, run efficiently and meet the requirements of its customers. With the newfound confidence brought in by the revitalised consortium, RVR has been able to attract capital financing from six development finance institutions (DFIs) and a regional bank to the tune of $164 million.

The balance was raised by the shareholders and internally generated revenues. Of this total, $49.1m was released in December 2011 and that is what has made us move our projects to where we are. By November, we plan to disburse another $41m towards rehabilitation of the railway.

So, how would you describe the current state of the company?

We look at RVR Kenya-Uganda as a whole, not just Uganda. The condition of the assets we inherited was terrible and it will take a lot more than a day to revitalize them. As I told you before, the period between 2006 and 2008 was very negative for the concession, essentially a stillbirth. At the moment, we are executing the second attempt at rehabilitating the assets and this is going very well given the progress made so far.

Six years later, you have yet to rehabilitate the dilapidated assets you inherited.

While it looks like we wasted five years, one must remember that the initial concession agreement was signed in 2006, and between 2006 and 2008 Sheltam was in charge of managing the operations; they totally messed up due to lack of capital, internal governance issues and failure to adhere to the conditions and requirements of the concession.  

Who is to blame for that?

It is very hard to apportion blame because the concession agreement was signed by the two governments, the lenders and the regulator that was supposed to come on board. Generally, I would say that there was a total mess-up in the initial setup of the deal structure by all the parties. However, the [plan was good] even the lenders were happy with it.

The period 2006-2008 was a wakeup call for us; we have learnt from past mistakes and now we are at the implementation stage of most projects that were meant to be carried out but were not.  

The workers union says the Nalukolongo workshop is now a shadow of its former self?

A contract for renovation of the workshop was awarded to Roko Construction Limited on August 31, 2012, the rehabilitation work will include reroofing of the main building, plumbing works, refurbishing all ablutions including those at the cloak room and improving the general workshop appearance. Preparatory works on site are already underway and the project is expected to be completed by the end of the year.

The workers say the locomotives and wagons you inherited are also in a bad shape.

I will start with the permanent way (Railway line): one of components of the railway we inherited in really poor shape were the culverts, as we speak, RVR is working on rehabilitating nine major the culverts between Busembatia and Jinja. We have constructed some and are rehabilitating others at a cost of $5.4m.

Just to give you some progress on this project: as we speak now, 95% of the access roads to perform the civil works and coffer dams are already in place. We have 43 locomotives, which were very old and in a bad state. Most of them need to be and will be rehabilitated. We have already embarked on this process and we hope to be done by 2012/2013. As regards the wagons, we have the KFW project to overhaul 365 wagons, and as of now, we have already done 82.

The minister for Works, Abraham Byandala, admits that the state of conceded assets is bad. He doesn’t rule out government repossessing railway operations.

This minister’s report [letter] that you are referring to was an old letter dated November 2011. On August 31, 2012, the minister gave a speech at the re-commissioning and handover of the MV Kaawa to RVR. He said that he is well aware and well informed that RVR is abiding to all the concession requirements, including paying the concession fee. He also said he was aware of the projects that we have put in place. The minister is now comfortable and happy with our work.

You have stopped providing break tea and covering some travel expenses for RVR staff. Aren’t these the first signs of a sinking ship?

We are on a transition from a parastatal to private business and this requires a change in mindset. There has to be some changes for the interest of our customers and shareholders, and new technology coming up. We have to ensure that wastage is not in place. It’s upon the discretion of the investor to determine the priorities.

How do you describe the current state of the workforce in terms of motivation and performance?

Our staff is well motivated and they are generally happy with the working conditions. When they suggest ideas of improving certain things, we internalise the implications and implement some of the ideas. Such suggestions can only come from people who are motivated and want to see a better company grow.

But the Uganda Railway Workers Union claim they are unmotivated, that decisions are made in Nairobi, and top managers are Kenyans.

We usually have monthly meetings with the union, during which issues are raised and deliberated on and agreed upon. I also regularly meet at least one of the leaders of the union and it hasn’t reached to a point as you reported. These letters that you are quoting are all generally very old.

On the issue of decision-making and Kenyans being in top jobs, we interact with both parties; we have staff who move from here and go to Kenya, and staff from Kenya who come here because we need to share ideas.

Out of a staff of 700 here in Uganda, there is only one Kenyan, who is me. I can tell you for sure in Kenya we have Ugandans in top positions like Paul Kabale who is general manager Safety, Daniel Katabira, general manager in charge of technical training. It’s not true to say that the top managers are from Kenya; we also have technical advisors from Brazil and this is one of the concession requirements. I haven’t heard anyone complain about this.

What’s your last word?

I see RVR becoming a modern transport and logistics enterprise. We believe this will happen gradually. As we work on that, we request for some degree of patience on behalf of the public, the stakeholders and the customers.


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