Client: Kenya Railways Corporation (KRC) and Uganda Railways Corporation (URC)
Funding: International Finance Corporation

The Governments of Kenya and Uganda have decided to procure their respective railways to a single concessionaire, which will establish operating subsidiaries in both countries. The Joint Concession has been awarded through a competitive bidding process to South African based Sheltam. More than 3000 km of rail network including all supporting assets cross the border between two emerging markets. A concession of this magnitude is rare if not unique.

The concession period is 25 years for both the railways with regard to freight services. For the long distance and commuter passenger services in Kenya (Uganda has no passenger services), the concession period is 7 years.

The track, rolling stock and all other core railway assets will be conceded to the Concessionaire, but continues to be owned by each national Asset Authority. These organizations are to be set-up, succeeding the respective national Railway Corporations.

The International Finance Corporation selected ECORYS in association with ARCADIS and GIBB Africa to act as Asset Valuation Consultant. The valuation of assets has been crucial to the success of the concession. The concession contract defined that any investment that the Concessionaire would make during the term of the concession will be balanced with the accumulated depreciation of the conceded assets.

The scope of work of ECORYS included:

• Design of a valuation and depreciation methodology;
• A comprehensive valuation of assets owned by the respective Railway Corporations (infrastructure, rolling stock, equipment and real estate);
• Development of software to ensure efficient and effective maintenance of the asset registers;
• An innovative depreciation methodology to ensure sustainable railway management.