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Kenya-Uganda Rail Operator to Repair Nairobi-Mombasa Line

Rift Valley Railways Ltd., the operator of the Kenya-Uganda railway, has bought $19 million of track to repair worn-out sections of the line from Nairobi, the Kenyan capital, and the port city of Mombasa.

RVR, as the company is known, shipped in 6,869 metric tons of rail, 10,000 railroad ties, and other accessories, paid for with part of a loan signed in August, Chief Executive Officer Brown Ondego said today in an e-mailed statement. The section of track being repaired is 70 kilometers (44 miles) long, he said.

“We expect to start laying the permanent way immediately,” Ondego said. “We’ll progressively increase speeds on the back of the developing efficiency on the tracks.”

The company in August signed a $164 million loan with six development-finance institutions and Equity Bank Ltd. (EQBNK), Kenya’s biggest lender by market value, to upgrade cargo capacity to almost triple its present 1.7 million tons annually and more than double train speeds to 70 kilometers per hour.

RVR plans to invest $287 million over the next five years to modernize its trains and tracks.

“We recently commissioned the construction of nine culverts on the Uganda side of the track between Busembatia and Jinja at a cost of $4.9 million which we expect to be completed by December 2012,” Ondego said.

The company also bought wheels and other parts for rolling stock in Kenya and Uganda, with the first phase of repairs expected to be completed in December 2014 at a cost $62.1 million, he said.

RVR, which manages about 2,000 kilometers (1,243 miles) of railway in Kenya and Uganda, moves an average of 1.7 million tonnes of cargo annually, giving it a market share of 7 percent. The company plans to move 4.5 million tonnes of the 26 million tonnes of cargo at the port of Mombasa by 2015, growing its market share to as much as 12 percent, Ondego said.

Citadel Capital SAE., an Egyptian private-equity company with assets of with $8.7 billion, owns 51 percent of RVR. TransCentury Ltd. (TCL), based in Nairobi, holds 34 percent and Bomi Holdings of Uganda 15 percent.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.

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