Kenya-Uganda Rail Company Plans Upgrade of Track in Oil Region

Rift Valley Railways Ltd., operator of the Kenya-Uganda line, plans to invest $15 million to increase freight capacity on part of the network near Uganda’s oil fields that may ship crude exports.

RVR has already invested $2 million to restore a 311-mile stretch of track from Tororo, near the Kenyan border, to Pakwach at Lake Albert, which was idle for two decades, Sammy Gachuhi, concessional general manager, said today.

Most of that section of the track reopened at the weekend and the Ugandan government may decide on a proposal to further improve the Tororo-Pakwach segment and boost volumes in about three weeks, Gachuhi told reporters in the capital, Kampala.

“We are one of the major stakeholders in terms of exporting oil,” he said. “Once that plan is approved we are home and dry.”

Development of Uganda’s oil resources, discovered in 2006, has been slowed by differences between London-based Tullow Oil Plc, Total SA (FP), Cnooc Ltd. and the government over the terms of a planned refinery and export pipeline. The companies are jointly developing Uganda’s oil finds of an estimated 3.5 billion barrels in the Albertine region and the government says production may start by 2018.

Uganda President Yoweri Museveni and his Kenyan counterpart Uhuru Kenyatta said in June the two nations are planning to lay down a pipeline for crude from the Albertine region to the Kenyan port of Lamu, which is being built.

Turnaround Plan

Investment in the Tororo-Pakwach route is part of the company’s $287 million, five-year “turnaround” plan for the RVR that began in 2011, Cosma Gatere, director external affairs, said at the same event today.

Two years ago, it agreed a $164 million loan from a group of six lenders that includes the African Development Bank, International Finance Corp. and Equity Bank Ltd., based in Kenya.

Citadel Capital SAE, an Egyptian private-equity company that owns 51 percent of RVR, Kenya’s TransCentury Ltd. with a 34 percent stake and Uganda’s Bomi Holdings with 15 percent interest have agreed to raise $82 million, Gatere said.

The company aims to increase cargo volumes on the 2,000-kilometer railway that connects to East Africa’s busiest port, in Kenya’s Mombasa city, to 5 million metric tons a year by 2015 from 1.61 million tons in the year through June 2011.

To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.

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