Rift Valley Railways Ltd., operator of the Kenya-Uganda railway, signed a $164 million loan accord to finance an upgrade that may boost capacity almost four-fold, according to its biggest shareholder, Citadel Capital SAE.
The credit is part of a planned $287 million investment in RVR over the next five years, Citadel Chairman Ahmed Heikal said in an interview in the Kenyan capital, Nairobi.
“This investment will not only greatly improve the efficiency of the railway, but that of the port of Mombasa as well,” Heikal said yesterday. The line links Mombasa, East Africa’s biggest port, to Kampala, the Ugandan capital.
Citadel, an Egyptian private-equity company with $8.7 billion in assets under its control, owns 51 percent of RVR, which manages about 2,000 kilometers (1,243 miles) of railway lines in Kenya and Uganda. Last week, RVR said freight volumes in the year to June increased to 1.61 million metric tons from 1.53 million tons a year earlier.
“The goal is to see that figure grow to 5 million tons per year by 2015,” Heikal said. “An efficient rail network could, in time, bring East African transport costs down by as much as 35 percent due to the operational and fuel efficiency of shipping by rail.”
Investment in the railway will include refurbishing the track, buying new rail wagons and locomotives and replacing information technology systems, Karim Sadek, Citadel’s managing director for eastern, central and southern Africa, said in the interview.
Beyond the loan, the balance of investment will be financed from new equity, existing shareholders and profits from operations, he said.
The loan was provided by six development-finance institutions and Equity Bank Ltd., Kenya’s biggest lender by market value. The African Development Bank is providing $40 million and Germany’s KfW Bankengruppe $32 million. Other contributors include the International Finance Corp., Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden NV, Cordiant’s Infrastructure Crisis Fund, and the Belgian Investment Company for Developing Countries.
“IFC is the largest financier, with a loan of $32 million, $10 million already disbursed,” IFC said yesterday in an e-mailed response to questions. “An additional equity investment of $10 million is planned, making the total $42 million.”
IFC and its unit Asset Management Co. will have a stake of about 25 percent in Africa Rail Ltd. Based in the British Virgin Islands, Africa Rail is controlled by Citadel Capital and will provide funding to RVR, IFC’s senior infrastructure manager, Ravi Bugga, said in an interview today.
TransCentury Ltd., based in Nairobi, holds 34 percent of RVR, and Bomi Holdings of Uganda 15 percent.