Kenyan authorities on Thursday failed to terminate the 2 5-year long concession offered to the Rift Valley Railways (RVR), the firm which n the tender to operate the railway line linking Kenya and Uganda, fearing tha t a takeover of its operations might trigger a collapse.
Kenyaâ?s Transport Minister, Charau Ali Mwakwere, said in a report that the mai n shareholders in the Rift Valley Railways consortium should be given more time t o look for a majority shareholder.
The RVR has been under pressure to increase the cargo volumes it transports alon g the line but critics said the firm has under-invested in the business since it
took over in 2007.
Kenya and Uganda privatized the colonial-era railway line, built in the 1900s, t o RVR, the firm which won the tender to operate the railway line, which is Ugand a â?s main source of imports from the port of Mombasa, nearly 1,800 kilometres lon g to Kampala.
Mwakwere said the government would allow RVR more time to craft a new shareholdi ng structure, which would help the existing shareholders to identify the majorit y shareholder in the RVR Consortium.
Kenya and Uganda agreed mid 2008 to build a new standard gauge railway line, fro m Mombasa, Kenyaâ?s coastal city, to Malaba, the border with Uganda.
The two governments expected the construction of the railway line to kick off th is year although the Kenyan Transport Minister says the start of the project thi s year might be delayed due to failure by the Treasury to release the funds requi r ed to get the project off the ground.
The standard gauge railway line is estimated to cost the two states Ksh120 billi on (US$ 1.6 billion).
Mwakwere said terminating the concession agreement between the Kenyan government , the RVR and the Uganda Railways, could lead to the collapse of the services cu r rently provided by the firm.
Kenya Railways, the parent firm which operated the railway line before the conce ssion, was turned into a regulatory authority to check the activities of the RVR .
Mwakwere said the Kenya Railways was not capable of taking over the operations o f the Rift Valley, whose majority shareholder was Sheltam Close of South Africa.
The other shareholders in the RVR consortium include the Trans-Century Investmen t, a Kenyan holding company that has acquired substantial stakes in profitable b u sinesses, mostly listed at the Nairobi Stock Exchange (NSE).
Meanwhile, The Kenyan government wants the renegotiated deal, which would includ e which of the shareholders gets to retain majority stakes, to include the stand a rd gauge railway line from Mombasa-Malaba-Kampala.