News & Analysis

Citadel keen to transform Kenya-Uganda railway

Ahmed Heikal, founder of the Cairo-based private equity firm, has issued bullish predictions about the improvements Citadel can make to the railway. A regulatory commission is deciding whether to give Citadel majority ownership of the line and a decision could come as early as next week.

-

In an interview to be published in the March 2010 issue of InfrastructureInvestor magazine, Citadel Capital founder and chairman Ahmed Heikal says: “The Kenya-Uganda Railway hauls just over 1 million tons per annum today. New investment and a fresh approach to management could see that figure grow to 5 million tons per annum within five years.”

Ahmed Heikal
He adds: “There is a lot of potential waiting to be unlocked by the smart deployment of capital and management talent to improve the efficiency of Africa’s railways.”

In a 2006 privatisation, a 25-year concession for the rehabilitation, operation and maintenance of the 900-kilometre Kenya-Uganda railway was awarded to the Rift Valley Railways consortium led by Sheltam Rail Company, a South African rail and marine services firm, and including six other shareholders.

The consortium’s ownership of the line has been highly controversial, with alleged under-investment and various targets missed in relation to such things as repair and rehabilitation and the volume of goods transported.

A joint Kenyan and Ugandan railway commission is currently pondering whether to give Citadel Capital majority ownership of Kenya-Uganda Railways in exchange for investment reported to be worth around $150 million – or whether to consider new proposals from RVR. An announcement on this is expected early next week.

Last month, Citadel Capital announced its intention to invest between $200 million and $400 million over the next two years in the East African countries of Kenya, Uganda and Tanzania in sectors including transport as well as agriculture, consumer foods and banking.

Also in the interview, Heikal says infrastructure investment in Africa “is not all about low returns and long horizons and it is about more than seaports, airports and roads. It is about gas distribution. It is about river transportation and logistics. And it is about all those industries that support growing demand for infrastructure, such as cement”.