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Inside Story: Why Cabinet Endorsed Termination of RVR Contract

The Uganda Cabinet decided to discontinue the concession of Rift Valley Railways after failing to fulfill its contractual obligations, it has emerged.

The Cabinet sitting on Monday noted that due to the continued poor performance of the Rift Valley Railways (RVR) in managing the Meter Gauge Rail network, the Government of Uganda had issued the Concessionaire a notice of defaults on the 28 July, 2016 with the intention of ensuring that the RVR remedies its obligations.

Some these include unilateral deduction and withholding part of the concession fees due to Uganda Railways Corporation;
failing to meet the required freight volume targets.

Other concerns were RVR’s failure to submit External Audit Reports and a plan to rehabilitate and maintain conceded assets such as Permanent way, rolling stocks, buildings and structures.

RVR also fell short of submitting a Safety Management Plan.

Officials say despite repeated reminders, RVR did not take heed.

Information Minister Frank Tumwebaze told press in Kampala on Tuesday that the consensus in Cabinet was that government and RVR divorce.

On his part, Finance Minister Matia Kasaija said RVR also failed to prove it could raise $10m needed to revamp the rail system.

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RVR, which is 80% owned by Cairo-based Qalaa Holding, won the concession to operate the country’s 1918km rail network in 2006 in a deal that was meant to span 25 years.

Cabinet on Monday observed that when the Concessionaire failed to rectify the defaults within the specified period, the Government of Uganda proceeded to issue a notice to terminate the concession as per section M.3 of the Concession Agreement and efforts were underway to receive the Meter Gauge Railway.

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