Sheltam locomotives en route to another railway in Africa earlier this year. TERRY HUTSON PORT ELIZABETH-based Sheltam Rail has won the concession to operate Kenya and Uganda’s railways. The 25-year concession was announced in Nairobi last Friday (October 14). Sheltam successfully outbid another consortium headed by India’s Rail India Technical & Economical Services (RITES), a company with close links to India’s government railway. RITES already holds the concession for the Beira to Zimbabwe railway in Mozambique and was favoured to take the Kenya/Uganda concession. The company however suffered a setback shortly before the bidding closed when Maersk Sealand withdrew from the consortium. Parent company AP Møller reportedly decided railways in East Africa didn’t fit in with its core operations. Sheltam’s success came by way of offering to pay 11.1% of gross revenues from rail operations compared with the 6% offered by RITES. The South African company also made a once-off payment of US$1 million to operate passenger services in both countries. In terms of the concession Sheltam will have to upgrade the main line from the port of Mombasa to Uganda and increase traffic levels by 175% within the first five years. Sheltam will however be able to set its own freight tariffs within the Monopolies and Price Control Act. Although the takeover is on March 31, 2006, Sheltam’s staff will begin work in East Africa almost immediately. For their part both Kenya and Uganda anticipate increased revenue by way of corporate taxes and concession fees as well as savings in road maintenance once rail begins to win back traffic.
