- 20 General Electric trains to overcome major obstacle to ramping up volumes
Regional railway operator, Rift Valley Railways has secured a Ush50 billion asset financing deal with Standard Bank of South Africa and CFC Stanbic Bank towards the acquisition of the 20 locomotives it is acquiring from the USA.
Standard Bank will be providing Ush50 billion ($20 million), or 80% of the price while RVR will provide the remainder of theUsh12.5 billion ($5 million) total amount.
“Insufficient locomotive power is the single biggest obstacle preventing a step change in the amount of volumes we transport”, said Carlos Andrade, RVR’s group CEO. “This new financing not only clears this bottleneck but is also a vote of confidence by a major international lender in our operations as it is premised on revenues to be generated by the trains”.
According to Standard Bank, a leading African arranger of asset financing,rail asset deals of this scale remain relatively rare in East Africa.
“Asset based financing is premised on projected cash flows of the asset being financed. Our due diligence on RVR gave us confidence that this investment proposal will indeed generate the revenue streams to service the loan”, said Kwame Parker, Head of Power and Infrastructure East Africa for Standard Bank.
The first three of the 20 General Electric locomotivesRVR has acquired arrivedin Mombasaearly September with full delivery expected by April next year. When added to locomotives being rehabilitated in the rail operator’s Nairobi workshop the trains will double RVR’s mainline locomotive fleet, substantially increasing its freight haulage capacity in Kenya and Uganda.
On-going wagon rehabilitation in Nairobi and Kampala is expected to bring the number of wagons to 2,400, more than double the current fleet, by June next year.