Africa Railways Secures Final Instalment Of $164m Capital
17 July 2014
Africa Railways, a subsidiary of Qalaa Holdings (formerly Citadel Capital), has completed the drawdown of the final $69.6 million of a $164 million senior debt facility, which it raised through global and East African financiers in 2011 to fund the five-year turnaround of its Railway Operator Rift Valley Railways.
The final drawdown, the company revealed, will be used to revamp the operator's entire system with new technology and better freight capacity.
Institutions participating in the $164 million senior debt package include the African Development Bank (AfDB); International Finance Corporation (IFC); KfW Entwicklungsbank (The German Development Bank, KfW); FMO (the Netherlands development bank); Kenya's Equity Bank; ICF Debt Pool; Belgian Investment Company for Developing Countries (BIO).
According to the Managing Director of Qalaa Holdings Karim Sadek, "Alongside a strong management team, the financing provided by these financial institutions has been key to turning around the fortunes of Rift Valley Railways".
He added that "A portion of the proceeds from the drawdown will be used to finance ongoing capex projects including the rehabilitation of the 366 kms of the Nairobi-Kampala section of the line, as well as refurbish a further 1,400 wagons in the existing fleet. Total capex spending this year will exceed $100 million".
Qalla owned Africa Railways, February, acquired an additional 34 percent stake in RVR from Transcentury Limited, a Nairobi-listed infrastructure company, raising its total ownership stake to 85 percent with the remaining 15 per cent being held by Bomi Holdings.
The Kenya-Uganda railway operator continues to attract new clients on the back of sustained investment in critical infrastructure, technology and cargo carrying capacity. Transportation and logistics are core industries of RVRs parent company Qalaa Holdings.
Sadek stated that freight clients in particular are benefiting and taking advantage of the investment in revitalizing the Kenya-Uganda railway system, which he says has been more "in the last 26 months than in the previous 26 years".
Among those investing in the revitalised railway system is Vivo Energy Kenya, which markets Shell-branded fuels and lubricants. Vivo announced earlier this month that it plans to double, in the near term, the 4 million litres of diesel per month it ships to Nairobi and Uganda from the port of Mombasa thanks to a program that will see 25 5 disused fuel-ferrying tanks brought into service at RVR workshops in Nairobi, Mombasa and Kampala.
Additional tank wagon acquisitions by RVR will triple its fuel-ferrying capacity over the next year. Purpose built saddles designed by RVR engineers also enabled Roofings Rolling Mills, a major Uganda based steel manufacturer, to shift most of the transportation of heavy steel coil imports from road to rail.
In the 2013 capex program, the rehabilitation of 73 km of track linking Nairobi and Mombasa at a cost of $20 million and rebuilding of nine culverts between Busembatia and Jinja resulted in the lifting of speed restrictions in critical sections of the line thereby slashing transit times between the port and Nairobi by six hours and Tororo to Jinja by 10 hours.
In addition, RVR launched a multi-million-dollar technology upgrade that saw global pos itioning system (GPS)-based software introduced on the trains allowing RVR track operators to centrally control the movement of trains and cargo along the railway track.
The automated train warrant (ATW) software allows online visualization from an operations control center in Nairobi, which pinpoints the precise location of trains along the railway replacing manual management of crossovers at railway stations with satellite-enabled self-switching movement of trains.