Uganda Railways to spend $4m to salvage 'Kabalega'

The ferry was built by the Belgian Ship Building Company at Port Bell at a cost of $20 million

By DAVID MUSOKE
Special Correspondent

MV Kaawa at Port Bell pier in Kampala shortly after crashing with MV Kabalega, which sank in Lake Victoria Picture: Morgan Mbabazi

A South African firm has asked Uganda Railways Corporation (URC) to pay it $4 million to salvage MV Kabalega, the ferry that sank in Lake Victoria ten months ago. 

URC managing director Daudi Murungi told The East-African that representatives of the firm, which he declined to name, visited Uganda a few weeks ago and located the site where the 880 metric tonne ferry sank. 

"They submitted to us a demand note of $4 million, which we have passed over to the Minister of Transport John Nasasira, who is also the head of the task force for rehabilitation of our ships, for consideration," Mr Murungi said. 

He said that URC, which, together with Kenya Railways Corporation (KRC) has been offered to a South African consortium to manage under a 20-year concession, did not have the equipment to inspect the sunken ship. 

They did not also have the expertise to salvage it and bring it to the surface. 

Mr Murungi said the Ugandan government has obtained financial assistance from the World Bank to salvage and repair the sunken ferry.

With World Bank assistance, two other ships belonging to URC, MV Kaawa and MV Pamba will also be repaired, reinsured and put back into use. 

The two ships were grounded last year when a South African insurance company, Alexander Forbes, decided to cancel their insurance cover. 

"At the time MV Kabalega sank, its insurance cover and that of the two ships had been cancelled by the insurers," Mr Murungi said. "We had already paid for the insurance covers when the company decided to cancel the covers after inspection and realising that the ships were not in good mechanical order. 

"In reality, they should have done the inspection before taking on our insurance. We have therefore decided to take them to court, which will sort out this problem."

He said about $2.4 million is needed to repair, insure and re-commission the two ships.

There was no loss of life when MV Kabalega sank on May 8 last year. However, the ship sank with a cargo of wheat worth about $300,000.

"We have discussed and agreed with the owner of the cargo that we shall compensate him. We have also agreed on the modalities," the URC boss said. 

Mr Murungi explained that economics dictated that MV Kabalega should be salvaged. The ferry was built by the Belgian Ship Building Company at Port Bell at a cost of $20 million. It had a lifetime of 20 years and had been in service for 10 years. 

Five years ago, the Tanzania Railways Corporation (TRC) lost its ship, MV Bukoba on Lake Victoria. The TRC management was advised to abandon efforts to retrieve the sunk ship because it was not economically viable. 

The World Bank last month approved three International Development Association credits and grants of a combined total of $199.02 million and partial risk guarantees for up to $60 million to improve trade and transport services in the three member states of the East African Community (Kenya, Uganda and Tanzania) as well as Rwanda, which is currently seeking membership. 

The URC boss said his corporation would use some of this money to fund the retrieval of the sunken ship and repair the two ships that are out of service. 

He said URC has lost between $3 million and $3.5 million in earnings as a result of the sinking of MV Kabalega. 

The three URC ferries were included in the concession deal with the Kenyan and Ugandan subsidiaries of Rift Valley Railways Holdings Ltd, whose lead investor is a South African company. 

"When the concessionaire comes to sign the agreement, we shall offer the assets including the ferries as they are and we shall enter into discussions on the way forward for the ships. The assets will continue to belong to URC. That is why we are keen to repair them and put them back into service," Mr Murungi said.