KAMPALA, NOVEMBER23 – Uganda and Kenya have concluded a Joint Operating Agreement for the Standard Gauge Railway under development in their respective territories.
256 Business News has learned that the agreement was developed and signed at the behest of the Chinese lenders who are bankrolling the project. Signed sometime in September, the agreement in effect ring-fences the rail network for a Chinese operator.
The China Eximbank is understood to have made the JOA a precondition for financing the extension of the line recently announced by the Kenyan government from Nairobi to Naivasha onward to Malaba. A financing agreement for the westbound section is yet to be concluded however, although it is expected to be locked in before the end of the year.
A JOA means that a single operator will manage the concession to run the line between Uganda and Kenya in much the same way as RVR is managing the two countries assets under the century old metric gauge rail.
The agreement also promises RVR a generous compensation package or a drawn out legal battle since the concession agreement gives RVR the first right of refusal to operate the SGR. It also makes compensation automatic in event of any actions that impact RVR’s operation by the governments.