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East African concessions make progress

01 Sep 2006

AFRICA: This month is due to see the transfer of operations on Tanzania Railways Corp's 2707 km metre-gauge network to Rites under a 25-year concession. The transfer is being partially funded by the World Bank and African Development Bank.

Tanzania's Minister for Infrastructure Basil Mramba explained in Dodoma on August 6 that negotiations had taken longer than expected because Rites is wholly owned by the government of India - so the deal had to be cleared by officials in New Delhi before it could be signed.

The Djibouti-Ethiopian Railway (CDE) is also preparing to transfer management of its 784 km line linking Addis Abeba to the Red Sea to the private sector. Comazar of South Africa was selected as preferred bidder for a 25-year concession earlier this year. CDE General Manager Tiume Tekie confirmed on August 2 that the concession documents were being prepared, and he hoped they would be signed in September. Transfer of control would then take place over the following six months.

After fighting interrupted services, the line is now open and 'earning good income', Tekie explained. At present the capacity is only 240000 tonnes a year, but he hoped that within five years the new operator would be carrying 1·5 million tonnes.

However, the takeover of railways in Kenya and Uganda by the Rift Valley Railways consortium led by Sheltam of South Africa, did not take place as planned on August 1. Transitional arrangements are still proceeding, and the expectation is that the 25-year concession will now start on November 1.

Uganda's Minister of Works & Transport John Nasasira told a press conference in Kampala on July 26 that the two governments had agreed to postpone the transfer so that RVR could finalise its financial arrangements with the World Bank and KfW of Germany. It would also allow the governments to address 'core labour-related issues like the payment of terminal benefits', he added.

One problem for RVR is that it was told Kenya Railways employed 7000 people, of which it promised to retain 4500. It has now emerged that the true figure is around 9000, leaving the government to pick up a higher compensation bill. In Uganda, Nasasira said the workforce numbered 1200 of whom RVR would take on 890.