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New platform for power generation in Africa

Posted A SPECIAL CORRESPONDENT

on  Wednesday, April 26   2017 at  13:07

Three international development agencies have come together to mobilise more than $1 billion for power generation across Africa, including the 147MW Ruzizi III project that will supply electricity to Burundi, eastern Democratic Republic of Congo and Rwanda.

The Aga Khan Fund for Economic Development (AKFED), its industrial and infrastructure development arm Industrial Promotion Services (IPS) and CDC Group, the UK development finance arm, launched the joint power initiative with a promise to boost power generation, accelerate economic growth and benefit millions of people in sub-Saharan Africa.

The partnership will focus on new power projects in greater East Africa (including DRC, Mozambique and Madagascar) and West Africa. IPS’s existing projects in Kenya and Uganda will be housed under the joint platform.

The partners will invest $140m, and mobilise project funding of $1bn for new power projects, including the Ruzizi III project in the Great Lakes region.

Ruzizi project

“Power infrastructure is vital for Africa’s economic growth and job creation and CDC has identified early-stage development as the area with the greatest need for investment in this priority sector. The market needs long-term, committed investors like CDC and AKFED to bring the capital, time horizons and expertise necessary to boost power generation for the continent,” said Diana Noble, CDC’s chief executive.

The Ruzizi III project, for instance, is expected to double Burundi’s current capacity, increase Rwanda’s capacity by 26 per cent and provide much needed base-load power in eastern DRC, a region that is otherwise isolated from DRC’s interconnected grid. It will also reduce reliance on thermal (diesel) generation in these countries.

National grids

Besides developing regional and national power projects, both IPS and CDC intend to partner on mini and off-grid projects that will directly provide reliable and affordable electricity to rural populations away from regional and national grids.

IPS has been involved in the development of power projects in East and West Africa for 20 years, including sub-Saharan Africa’s pioneering independent power projects — the Azito power plant in Côte d’Ivoire, the Kipevu II (Tsavo Power) plant in Kenya, as well as the Bujagali Hydropower Project in Uganda.

“It has been an evolving journey, involving both public and private partners, which has seen a recent shift in focusing investments on renewable energy, taking advantage of advancement in solar and wind technologies, as well continuing to provide the reliable baseload power which many sub-Saharan African countries need. We see in CDC a like-minded partner that is strategically aligned to our values and mandate for contributing to development, and have partnered with them previously on pioneering power projects in the region. This platform, therefore, will build on this existing partnership, accelerating and scaling the development of new power projects, spreading our impact across the sub-Saharan region and, ultimately, improving the quality of life of communities,” said Lutaf Kassam, the executive director of AKFED.

Local relationships

In 2015, CDC took direct ownership and control of Globeleq Africa, an independent power producer that partnered with IPS in the Azito Power project.

“With this new partnership, we are tapping into the AKFED Group’s proven power sector expertise, including in hydropower, and excellent local relationships, with the aim of bringing reliable power to many millions of individuals, families and businesses across Africa,” Ms Noble added.

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Mobile service hitch affects millions in Kenya

Posted AFRICAREVIEW.COM

on  Monday, April 24   2017 at  13:46

Millions of Kenya's Safaricom customers were unable to make calls Monday morning after the mobile service provider experienced a technical hitch.

The technical problem affected subscribers countrywide with the company saying it is working to resolve the issue.

“Sorry we are having a slight technical fault with the network services countywide but the issue is being resolved,” the company posted on its Twitter account.

Data from Communications Authority of Kenya shows that Safaricom has the highest number of mobile subscribers with 26.6 million customers.

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China, India top queue for Kenya’s oil exports

Posted BUSINESS DAILY

on  Wednesday, April 19   2017 at  13:13

China and India have emerged as the main buyers of the Turkana crude oil that Kenya plans to export under a test programme beginning June, contrary to an earlier announcement that buyers had been found in Europe.

Petroleum Principal Secretary Andrew Kamau said the first sea tankers will dock at the Mombasa port in June to pick up the consignment transported from northern Kenya by road and stored at the Mariakani refinery tanks.

British oil explorer Tullow, the developer of the Turkana oilfields, has already pumped out and stored 60,000 barrels of crude in Lokichar in readiness for transportation to Mombasa.

Mr Kamau who had in February said a deal had been struck with European refiners to buy the Kenyan oil Tuesday made an about-turn and said no such agreement had been reached.

Shipment logistics

“About Europe, let’s just leave it until people have confirmed they will pick it up,” he said, adding that the buyers will incur the cost of shipment logistics.

Crude exports are set to open a new line of trade between Kenya and the two Asian powerhouses, which are the biggest suppliers of goods to Nairobi.

China’s expected intake of Kenyan crude adds to the list of extractives the Asian economic giant gets from the East African nation. So far the list includes titanium – which is used as an alloy to produce jet engines.

Official data shows that Beijing’s titanium imports from Kenya stood at $5.2 million (Sh5.3 billion) in the first 10 months of last year, accounting for over 80 per cent of the total imports from Nairobi.

The top seller

India, which boasts a number of refineries, had until last year been the top seller of petroleum to Kenya.

It was, however, overtaken by the United Arab Emirates (UAE), which is currently the biggest supplier of oil to Kenya.

Kenya’s crude oil is classified as light and sweet, meaning it has less sulphur (below 0.5 per cent) – an impurity that has to be removed before crude is refined into petroleum.

This type of oil is known to fetch higher prices in the global market because dealers find it easier to refine and it produces high-value products — petrol and diesel. It is, however, waxy and sticky, making it necessary to heat it during transportation.

Early production

Tullow Kenya told the Business Daily that it awarded the contract for early production facility (EPF) to UAE-based Al Mansoori Petroleum Services.

The contract involves oil-well site equipment, control rooms and civil works.

Kenya plans to move between 2,000 and 4,000 barrels of oil per day using trucks mounted with oil tank-tainers (150 barrels) in the absence of a pipeline.

Some 100 tank-tainers will be required, according to Tullow.

The global market

Kenya is moving towards exporting its first consignment of 2,000 barrels per day beginning June to test the receptivity of the oil in the global market, pending construction of a pipeline connecting the Turkana fields to the coast.

Nairobi enlisted the legal services of London-based law firm Simmons & Simmons to shepherd the export plan.

Nigeria’s oil — bonny light — is among the best in the world while Gulf oil is of low quality and is classified as heavy and sour as it comes with lots of sulfur that has to be removed before refining, raising processing costs.

South Sudan’s dar blend is also classified as being of poor quality, reaping lower returns, while the country’s Nile blend is top quality.

Refined products

Refurbishment of Kenya Petroleum Refineries Limited (KPRL) storage facilities is ongoing to handle the Turkana crude, pending shipment.

KPRL has 45 tanks, nearly half of which will store the crude from Turkana for shipment while the rest is for refined products.

Kenya expects to embark on large-scale production in 2020 and will export the oil through the 865-kilometre pipeline linking the Turkana oilfields to Lamu port to be built at a cost of Sh210 billion.

The pipeline will enable East Africa’s largest economy to pump out about 100,000 barrels a day.

The government hopes that oil exports will earn the country the much-needed petrodollars and help stem the rising tide of public debt that now stands at Sh4 trillion or half the gross domestic product (GDP).

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Nigeria reopens Abuja airport after runway repairs

Posted BBC

on  Tuesday, April 18   2017 at  20:10

Nigeria's airport in the capital, Abuja, has reopened six weeks after it was closed for urgent repairs.

A spokesman for the aviation authority, Mr Henrietta Yakubu, said repair works were completed 24 hours ahead of schedule.

The new route

An Ethiopian Airlines flight was the first to land on Tuesday morning.

Flights had been diverted to Kaduna, 160km from the capital, and some international carriers refused to operate the new route.

Those airlines were now taking bookings for flights later this week.

The capital

The runway at Nnamdi Azikiwe airport was supposed to be upgraded in 2002 - it was built in 1982 and was only meant to have a 20-year lifespan.

There have been celebrations that the repair project was completed ahead of time but the fact the capital was without a functioning airport for more than a month highlights the state of Nigeria's crumbling infrastructure, the BBC's Martin Patience says.

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Kenya to export 100,000 workers to Saudi Arabia

Posted WANJOHI GITHAE in Nairobi

on  Sunday, April 16   2017 at  14:40

Kenya may soon export 100,000 workers to Saudi Arabia if negotiations between the two countries bear fruit while Qatar is willing to open its market for Kenyan meat.

These are some of the wins the government achieved when it received high-profile visitors from the two countries this week.

The Emir of Qatar, Hamad bin Khalifa Al Thani, was on a one-day state visit to Kenya on Tuesday and Saudi Arabia’s Commerce minister Majed bin Abdullah Al-Kassabi led a delegation of 70 people from the private sector and government officials for talks with Nairobi on Wednesday.

Resolutions seen by the Sunday Nation show that Saudi Arabia and Kenya agreed to work together on a number of issues.

Other countries

However, it puts into question previous agreements Kenya has made with other countries.

In 2015, the government said it had secured 100,000 jobs in the United Arab Emirates and up to now nothing has been heard of the deal.

In the new deal with Saudi Arabia, the Middle East economic powerhouse, will negotiate with Kenya for skilled and semi-skilled workers such as nurses and technicians.

The two governments agreed to continue addressing the thorny issue of domestic workers who suffer in the hands of their employers in Saudi Arabia.

Legal framework

The Qataris agreed to put up Nairobi’s financial hub. Since 2014 Kenya has been angling to become Africa’s top financial hub but the lack of a legal framework has been a drawback.

The Emir and his delegation also agreed to support the completion of the Lamu Port South Sudan Ethiopia Transport Corridor project.

The agreement on cultural corporation will focus on the reconstruction of Bomas of Kenya as a modern cultural and convention resort.

The upgrade has been in government’s plans for quite some time.

Subsidised prices

A team comprising Qatari government officials is expected in Nairobi in three weeks’ time for further discussions on these issues.

Separately, the Saudi Arabian delegation had a joint meeting with seven Cabinet Secretaries where it was agreed that a government-to-government agreement will soon be negotiated so that Kenya can purchase Saudi crude oil at subsidised prices.

“This is about continued engagement with a key Middle East country in securing opportunities for Kenyans.

The President recognises that he must continue to seek and deliver decent jobs for Kenyan people, and that’s exactly what he is doing,” Manoah Esipisu, the President’s spokesperson, said.

The meeting also agreed on the negotiation of a government-to-government agreement in order for Kenya to import fertiliser at cheaper rates from Saudi Arabia.

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Blow to Rift Valley Railways as investor pulls out of ‘takeover talks’

Posted NJIRAINI MUCHIRA

on  Saturday, April 15   2017 at  09:28

Uncertainty surrounding the future of the Kenya-Uganda Railway concession has claimed its first casualty, with a private equity firm pulling out of a deal to acquire the operator Rift Valley Railways (RVR) from Qalaa Holdings of Egypt.

The decision by Emerging Capital Partners to disown talks that had been confirmed as ongoing by, among others, the Kenyan regulator of the line got a quick response from RVR, which said it would seek answers from its shareholders (Qalaa) on what was going on.

“ECP is not currently in discussions with Rift Valley Railways or its principal stakeholders about an investment in RVR,” said the firm in a statement.

Audit

The ECP statement came almost a fortnight after it was reported to have commissioned an audit firm to carry out due diligence on RVR’s financial position.

It also came a week after it emerged that Kenya had terminated the RVR contract over non-payment of fees.

Due diligence, the perusing of books to confirm accuracy with third party records like asset registries and bank accounts, usually follows an agreement in principle of interest in acquiring a company. It is done on a strictly confidential basis.

When contacted by The East-African, RVR chief executive officer Isaiah Okoth said he was awaiting communication from Qalaa Holdings on the new developments.

“ECP has been negotiating with shareholders and I am waiting for official communication to know the status of the negotiations,” Mr Okoth said.

RVR statement

Later, RVR issued a statement signed by Mr Okoth which just fell short of questioning ECP’s integrity.

“RVR has been in discussion with several potential investors, including ECP, through its shareholders. As far as RVR is concerned ECP has been involved in due diligence of RVR business,” reads the statement signed by Mr Okoth.

Barely a week after Kenya Railways Corporation terminated the Rift Valley Railway concession, ECP has walked out on plans to acquire the majority shareholding in RVR.

ECP, which had reached an agreement with Cairo-based Qalaa Holdings to acquire its 73.76 per cent stake in RVR, has opted out of the deal following the termination of the 25-year concession.

It added that it will continue to explore opportunities to invest capital to support the growth of East Africa’s infrastructure sector.

RVR also said it was pursuing other options in consultation with the Kenyan and Ugandan regulators “with a view to achieving the best possible outcome for all stakeholders in this regard.”

What future?

The decision by ECP to opt out of the deal at the eleventh hour makes RVR’s position even more problematic, considering it was mainly banking on the coming on board of the new investors not only to salvage the concession but also to inject capital into the business to ease its survival.

According to observers, ECP must have decided to opt out of the RVR acquisition after the company lost the main asset, which is the concession and which still had another 13 years before it expires.   

“The concession agreement is the main asset for RVR. It is the main value for investors,” said Philip Muema, Nexus Business advisory managing partner.

Last week, KRC terminated the 25-year concession citing defaults on various parameters of the concession agreement by RVR.

RVR managed to get a 30-day temporary relief after the High Court put an injunction on the execution of the termination notice, which gave the company a 120-day window to salvage the concession.

In an earlier interview with The EastAfrican, Mr Okoth had exuded confidence that RVR would seal the deal with ECP within the timeframe.

But with ECP pulling the plug, RVR is technically on its deathbed unless Qalaa digs into its coffers to settle the company’s outstanding financial obligations.

In terminating the concession, KRC said that RVR has defaulted on three key terms of the concession agreement — namely standard of maintenance of conceded assets, freight volume targets and payment of concession fees.

Defaulting
On assets, RVR has failed to maintain the track, resulting in speed restrictions on 187 km of the main line, which is 17.3 per cent of the line.

RVR has also failed to rehabilitate and maintain the locomotives, rolling stock, buildings and structures.

On freight volume, the company has failed to achieve targets as at the end of year nine, recording 1.1862 BNKM against a target of 2.1145.

On fees, RVR has failed to settle concession fees totalling $4.1million as of December 2016, rent amounting to $1.7 million and another $20 million and $10,720 for life expired assets and life expired wagons and assets destroyed in accidents respectively.

Since taking over the concession to operate the 1,300 km metre gauge railway from Mombasa to Kampala in 2006, RVR has remained in the red and has failed to improve railway transport with its annual cargo haulage stagnating at 5 per cent of the total cargo arriving at the port of Mombasa.

In a span of 12 years, RVR has changed hands four times.

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Concerns about Tanzania oil and gas regulator's capacity

Posted EMMANUEL ONYANGO in Dar es Salaam

on  Friday, April 14   2017 at  18:46

Tanzania's gas and oil regulator lacks the capacity to execute its mandate, report shows.

The Controller Accounts General’s (CAG) report for the period ending June 30, 2016 raised questions about the capacity of the Tanzania Petroleum Development Corporation (TPDC).

CAG's Prof Mussa Assad said TPDC was in danger of releasing inaccurate reports due to lack of sufficient knowledge in analysing the geological and geo-physical data.

He said that from a total of 71 projects which were registered in the exploration and development of oil and gas between 2010-2015, only 4 per cent had been inspected to determine their level of compliance with the environmental regulations.

Follow-ups

The report further shows that there have been no further effective inspections and follow-ups on the oil and gas projects to establish if they observed the environmental protection standards.

CAG further indicates that there was a general lack of efficiency in revenue collection from the oil and gas exploration activities around the country.

Consequently, the government proceeds fell below average.

For the last five years of a trading period, the Tanzania Revenue Authority (TRA) collected below the average of $92.4 million (TSh 208bn), an amount equivalent to a single ministry's annual budget allocation.

Local experts

CAG further noted the lack of capacity to produce enough local experts for the increasing demand for the sector, noting the government only managed to meet 20 per cent of the total experts demand.

The report further shows that there was a shortage of 48 per cent trainers in its audit of six training institutions chosen to lead the provision of training and skills in the oil and gas sector.

In addition, CAG discovered the existence of weak supervisory system for the implementation of regulations and procedures to involve the locals in the gas and oil sector.

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Ethiopia revokes over 50 mining licences

Posted ANDUALEM SISAY in Addis Ababa

on  Friday, April 14   2017 at  14:49

Ethiopia has cancelled over 50 mining and explorations licences, official said.

The Public Relation and Communications Director at the Ministry of Mines, Petroleum and Natural Gas (MoMPNG), Mr Bacha Faji, said the action followed the failure by several licence holders to commence operations on schedule.

“We cancelled over 50 mining licences recently, mainly because the companies have not started operations on time as per their agreement,” said Mr Bacha.

The law requires a company to commence exploration or mining within 90 days after signing a contract with the ministry.

Joint ventures

Mr Bacha said MoMPNG had registered 530 mining companies so far, including, the active, cancelled, transferred and under evaluation/ investigation licences owned by local and foreign entities as well as joint ventures.

The ministry statistics indicate that a total of 211 mining licences have been cancelled since 2004.

They include 130 owned by foreign firms, 49 joint ventures and 32 fully local-owned licences.

Though one out of three Ethiopians lives below the poverty line, earning less than $1.90 per day, recent reports show that the country was endowed with many natural resources, including gold, iron, natural gas and oil.

Mineral exports

Gold ranks among Ethiopia's major mineral exports, generating around $440 million in 2011/12.

Tigray in the north, Gambella and Benishangul Gumz in the west, Amhara in the north central and the southern and Oromia are the gold producing areas.

According to the mining ministry data, as of January 2016, there were about 170 licensed companies engaged in exploration and development of gold with 51 per cent of the licences issued to foreign firms, while 21 per cent were joint ventures.

MIDROC Legedembi Gold Mine, owned by Ethiopia-born Saudi tycoon, is the main firm modernising the formerly state-owned gold mines.

The target

In the first six months of the current fiscal year (August 8, 2016 – February 7, 2017), Ethiopia exported a total of 1,401kg gold, which only achieved 35 per cent of the ministry’s target for the period.

During the same period, Ethiopia exported 24.44 tons of tantalite concentrate, which was only 22 per cent of the ministry’s target for the period. It also exported 6,213 cubic meters of marble, which only met 24 per cent of the target.

Ethiopia’s mining sector contributed 1.5 per cent to the GDP in 2011/12 budget year, according to the 2014 World Bank assessment report.

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Not so fast, Uganda tells Kenya over decision to end RVR concession

Posted NJIRAINI MUCHIRA and JULIUS BARIGABA

on  Thursday, April 13   2017 at  16:45

Uganda has differed with Kenya over the decision to terminate the management of their joint railway by Qalaa Holdings of Egypt, saying there are better alternatives to addressing the dispute on concession fee arrears.

Uganda Railways Corporation managing director Charles Kateba said the Rift Valley Railways (RVR) concession “still stands” because “there are other options,” though URC had “no clear decision at the moment.”

Kenya Railways Corporation last month pulled the plug on the troubled 25-year contract to operate the Kenya-Uganda railway but Mr Kateba said the operator was still in discussions with the Kenya regulator.

“Until all these processes are fully exhausted, URC cannot take a decision whether to also terminate,” said Mr Kateba.

However, he said, URC was concerned by RVR’s failure to meet operating targets especially the concession fees, on which it was behind schedule by nine months.

“They are not up to date and that’s worrying, because they are not supposed to go beyond even by one day. If they do we charge them at the rate of Libor,” Mr Kateba said.

Notice to terminate concession

In January, KRC managing director Atanas Maina put RVR on notice to terminate the concession, over unpaid fees to the tune of Ksh600 million ($6 million) and failure to meet other targets. In March, the Kenyan parastatal officials travelled to Kampala to meet their counterparts in Uganda.

Since day one when they took over the operations of the Kenya-Uganda rail line in 2006, RVR has been dogged by failure to meet targets, first failing to pay the concession fees of $3 million and $2 million for KRC and URC respectively.

The concessionaire could be handed a lifeline if the owners allow the operator to borrow or bring in new investors as provided in the contract.
A government official in Kampala says a decision whether to terminate, allow refinancing or bring on board more investors “will be made by this time next week.”

Lenders and suppliers are among those looking for a quick resolution as they are also owed $164 million.

KRC cited defaults on various parameters of the concession agreement.

RVR managed two weeks ago to get a 30-day relief after the High Court put an injunction on the execution of the termination notice but the company was still inundated with enquiries because KRC had copied the termination notice to all the lenders.

“KRC has ignited a panic and now everyone is calling to know the status of their contract with RVR,” said a source.

RVR debts

Among the lenders to which RVR owes millions of dollars are the International Finance Corporation ($22 million), the Dutch Development Bank ($20 million) and Belgian Investment Company for Developing Countries ($10 million).

Others are German Development Bank ($32 million), Infrastructure Crisis Facility ($20 million), African Development Bank ($40 million) and Equity Bank ($20 million).

Operations at RVR may grind  to a halt, as suppliers, particularly of fuel and spare parts, have started demanding upfront  payments at a time when it is experiencing significant financial constraints.

The move by KRC to end the 25-year concession now puts in jeopardy takeover negotiations between RVR majority shareholder Qalaa Holdings of Egypt and Washington-based Emerging Capital Partners (ECP).

READ:Troubled RVR still attractive to investors, gets new shareholder
Key RVR customers were also expressing fears over the company’s ability to keep the engines and wagons on the tracks to guarantee that their cargo is delivered. 

“RVR is facing challenging times but these are of short term nature. We believe there is light at the end of the tunnel when new investors come on board,” RVR chief executive Isaiah Okoth told The EastAfrican.

He added that until new investors come on board and inject at least $500 million in the business, RVR cannot honour obligations being demanded by KRC from the revenues that it is currently generating.

“We have decided to prioritise the continuity of the business because investors want to invest in a company that is running. Concession fees can be settled when money comes in,” he said.

Concessionaire

RVR won and was picked as the Kenya-Uganda railway concessionaire in 2006, to operate freight and passenger rail services in the two countries on an exclusive basis for 25 years over the more than 2,000 kilometre track from Mombasa and terminating in Kampala.

The RVR shareholders in 2006 included Sheltam Pty with a majority stake, Prime Fuels (15 per cent), Mirambo Holdings (10 per cent), Comzar (10 per cent) and CDIO Institute for Africa Development Trust (4 per cent).

In 2010, the shareholding structure changed to Citadel Capital (51 per cent), TransCentury (34 per cent) and Bomi Holdings (15 per cent). In March 2014, TransCentury sold its entire stake to Africa Railways Limited subsidiary Qalaa Holdings (formerly Citadel).

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25-year Kenya-Uganda railway deal terminated

Posted BUSINESS DAILY

on  Wednesday, April 5   2017 at  12:30

The Kenya Railways Corporation has terminated Rift Valley Railways’ (RVR) 25-year contract to run the Kenya-Uganda railway, casting dark clouds over the future of the private operator.

The Business Daily has learnt that Kenya Railways terminated the contract last Thursday, citing RVR’s failure to meet set operating targets, including payment of concession fees.

RVR, whose ownership is controlled by Egyptian private equity firm Qalaa Holding, was informed of the decision through a letter delivered to its bosses on Thursday morning — a day after the operator moved to court seeking orders to stop it.

The termination process was set in motion in January when Kenya Railways managing director Atanas Maina issued RVR with a notice over unpaid fees amounting to $5.8 million (Sh600m) and a string of misses in cargo haulage targets.

Attend the meeting

RVR’s chief executive Isaiah Okoth declined to comment.

The journey to termination picked pace in mid-March when Kenyan officials travelled to Kampala for a meeting with their Ugandan counterparts to assess RVR’s performance.

Qalaa’s head of transportation division Karim Sadek, who was expected to attend the meeting, failed to show up, instead choosing to send a junior officer.

The snub infuriated the top government officials, who left the meeting having passed a resolution to terminate the contract at the end of the 90-day notice they had issued in January.

Rushed to court

Mr Sadek is reported to have got wind of the looming termination and rushed to court for an injunction to stop it.

But the court declined to issue the order and instead asked the rail firm to return to court the next day (March 30) with the defendants for an inter-partes hearing.

Kenya Railways, which was expected in court on Thursday morning, however made a pre-emptive strike by serving RVR with the termination letter that effectively made the impending court appearance irrelevant.

The dispute

The termination of the contract leaves RVR shareholders, including Qalaa, Uganda’s Bomi Holding, the Kenyan government and the international finance institutions (IFIs) that invested millions of dollars in the rail firm with 180 days to sell it to a strategic investor or return it to Kenya Railways.

On March 31, RVR obtained an order asking parties to the dispute to seek an out-of-court settlement.