Rift Valley Railways says upgrading Uganda line to carry oil

By Elias Biryabarema KAMPALA (Reuters) - A Ugandan railway line abandoned for over 25 years, linking Kampala to northern Uganda's oil-rich West Nile region, will be restored to full capacity by the time Uganda starts production in 2016, operator Rift Valley Railways (RVR) said on Wednesday. The rail network in Uganda and neighboring Kenya has suffered decades of underinvestment but with regional economies booming and trade increasing, improving the region's crumbling infrastructure has become a priority. For landlocked Uganda, which relies heavily on Kenya's busy Mombasa port, poor roads and rail links to the Indian Ocean have been a drag on the economy and its nascent oil sector, which requires swathes of large equipment transported to remote areas. Sammy Gachuhi, RVR's general manager, said the line from Kampala to oil-rich areas was re-opened last month but needs more work to be able to withstand carrying heavy equipment or exporting large volumes of oil. "The first stage is done," Gachuri said, pointing out that $15 million will be invested over the next two years to improve capacity on the line. Uganda discovered commercial hydrocarbon deposits in the Albertine rift basin along its border with the Democratic Republic of Congo in 2006 but experts say production is unlikely to start until after 2016, the government's target date. Uganda's reserves are estimated at 3.5 billion barrels. "By the time the oil exploration is through (will we be) ready to carry the oil? The answer is yes," Gachuri said. Uganda has agreed to a plan to build a pipeline from its oilfields to a new port being developed on Kenya's northern coast, though these plans are at an embryonic stage and Uganda may have to initially transport some of its oil via rail. RVR, which is majority owned by Egypt's Citadel Capital, won a 25-year concession to run the Ugandan and Kenyan railway networks jointly in 2006 but ran into trouble shortly after failing to secure and invest adequate new capital. In 2010, however, the company brought in new investors who committed to spend $287 million over five years to rehabilitate the dilapidated network. One of its priorities is to renovate the 930 km line from Mombasa to Kampala, a vital trade route for Uganda. Cosmas Gatere, RVR's director of external affairs, said the company plans roughly to triple the stock of wagons on the route while cutting the time it takes cargo to travel from Mombasa to Kampala from seven days to 2.5 days. "Our target is that by the year 2015 to have 3,400 wagons" he said.