Rift Valley Railways parent company Qalaa holdings has secured a Sh1.8 billion asset financing deal towards the acquisition of 20 locomotives from the USA.
The syndicated loan from both Standard Bank of South Africa and CFC Stanbic Bank will fund 80 per cent of the Sh2.2 billion total cost of the locomotives, with RVR funding the balance.
The new locomotives will allow RVR, majority owned by Egyptian investment firm Qalaa Holdings, to significantly upgrade its freight volumes that has struggled to live up to its expectations.
The entity, which has a 25-year concession to run the Kenya-Uganda railway line, has come under criticism from government over failure to meet terms of the pact, including performance and fees payments.
Securing a commercial financing deal of this nature is a vote of confidence in the turnaround that we have been implementing alongside the RVR management for the past two years,” Qalaa Holdings Managing Director, Karim Sadek said in a statement.
The first three of the 20 locomotives that RVR has acquired arrived in Mombasa in early September with full delivery expected by May of next year.
RVR is expected to combine the locomotives with others that are being rehabilitated in the rail operator’s Nairobi workshop to double its mainline locomotive fleet, substantially increasing its freight haulage capacity in Kenya and Uganda.
In April of this year, Qalaa holdings acquired an additional 34 per cent stake in RVR from Trans century Limited though its subsidiary Africa Railways.
The deal raised Qalaa holdingss total ownership to 85 per cent with the remaining 15 per cent being held by Bomi Holdings.
“Insufficient locomotive power is the single biggest obstacle preventing a step change in the amount of volumes we transport,” RVR chief executive officer, Carlos Andrade said.
Source: Ramenya Gibendi - Daily Nation