IN THE BATTLE FOR CONTROL of Rift Valley Railways pitting local company, Transcentury Ltd and wealthy Egyptian private equity firm, Citadel Capital, two questions are intriguing: Why are these Egyptians so eager to have a foothold in the shareholding of Rift Valley Railways? What have they seen in this messy and financially-troubled company?
I put the question to a number of sources who have been following the transaction and this is what I found. Basically, the pundits are spinning two theories. First, those supporting Transcentury insist that the advent of the Egyptians must be viewed in the context of regional geopolitics.
Since all indications are that Southern Sudan is going to secede, North African interests have responded by seeking to acquire influence in the main access routes to that country, including railways, roads and ports. The fact that the extension of the pipeline from Eldoret to Kampala is being built by Libyans is also cited to support this Northern Africa conspiracy theory.
On the flip side are those who view the phenomenon in strictly economic terms. That with the discovery of oil in Uganda, the fortunes of RVR are going to change radically for the better. According to this theory, North African private equity funds have lined up billions to invest in Ugandas nascent refinery business.
They are thus keen to pump money into rehabilitating the 900-kilometre Kenya-Uganda Railway line as they realise that the railway is in the immediate future going to be the main route for oil exports from Uganda. According to this theory, the crude oil that has been discovered in Uganda is the waxy type which must be transported under heated conditions.
Since Uganda is not about to invest in a heated pipeline in the near future, the calculation of the North Africans is that an investment in the Kenya-Uganda Railway will complement the interests they plan to acquire in Uganda. Enough of theories and schools of thought. The more pertinent question is the following: Where does Kenyas interest stand in all this and who, between Transcentury and the Egyptians, is best placed to champion our interests?
Kenya needs more of its own private equity funds like Transcentury. Where the fight is over trade routes, export markets and access to regional markets, we have an obligation to unequivocally support our own.
THE BATTLE BETWEEN TRANSCENT-ury and the Egyptians over the control of RVR is, however, tricky because what we are dealing with here is privatisation. When, as a government, you privatise a company, you must realise that what you are doing amounts to transferring public assets to private individuals.
You have to avoid the perception that you are transferring public assets to your local cronies and supporters. And, if you lean on the side of the foreigners, you will be accused of transferring public assets to your foreign associates and agents. Because we mishandled the privatisation of the defunct Kenya Posts and Telecommunications Company, we ended up with Mobitelea.
When in 1984, in the name of supporting local companies, the Moi regime introduced rules requiring that all foreign insurance companies sell 30 per cent to local companies, all those shares went to the cronies of the president. In 2000, when government, also in the name of supporting locals, came up with a requirement that 40 per cent of privatised telecommunications assets must go to locals, it served to open opportunities for Mois cronies to own these assets.
When you are transferring ownership of public assets of a strategic nature like the Kenya-Uganda Railways to private individuals, the most important test should be the ability to provide the money and to roll out efficient services. What Kenya and Uganda need right now is an efficient and reliable railway service.
Of course, it would be much better if a local private company took over control. But only if it can demonstrate that it has more resources and better capacity than the foreigner. I totally support the way the government has so far handled the raging battle between Transcentury and the Egyptians.
We must remember that none of the six shareholders of RVR can claim experience in running a railway. All are mere financial investors. What the Kenya and Uganda governments have told the shareholders is the following: If you want to control the assets of the railways, pump money into the new outfit known as the Kenya Uganda Railways Holdings. Put up or shut up. It is very fair.
Correction -RVR joinlty owned na Kenya and Uganda.Railways have crucial role in opening up region.We only hope rail link voi to moshi will be re established.