Settle workers' dispute out of court, URC told

By DAVID MALINGHA DOYA
Special Correspondent

Kenya has asked Uganda to settle a dispute with employees of the Uganda Railways Corporation (URC) out of court so that a joint concessioning of the Kenya-Uganda railway can go ahead.

The joint concession was awarded to Sheltam Rail of South Africa but the employees have since won an injunction against the concession. It is understood that a Kenyan delegation was in Uganda recently to discuss a resolution of the matter with the government.

The Kenyan delegation is said to have threatened concession the rail network within the country, leaving out the Uganda portion, unless Uganda concludes the issue. "They said they would consider going it alone," URC officials told The EastAfrican. 

Kenya has already signed the concession agreement with Sheltam ahead of Uganda, where URC workers filed an injunction against the sale. The concession has been marred by disagreements between parties in the consortium that won the bid to manage the Uganda-Kenya railway.

But Ugandan officials warn that the pressure from Kenya could lead to a hurried settlement of the case between the URC Workers Union and the Privatisation Unit, which may lead to payment of exorbitant settlements to the workers.

The government has agreed in principle to settle the case out of court and has been negotiating with the workers, who had originally demanded Ush80 billion ($45.7 million) as terminal benefits, pensions and other payouts like golden handshakes and leave compensation.

The main area of disagreement has been the computation of the terminal benefits, which URC workers say should be based on a consolidated salary while the government says they should be pegged to basic salary.

After the negotiations, however, the Privatisation Unit officials say the figure is unrealistic and want to whittle it down to about Ush20 billion – doing away with the golden handshakes and leave compansation.

A Ministry of Finance official said although it is the duty of the Privatisation Unit to pay the terminal benefits for former workers of divested companies, the corporation should have had a pension fund in place to pay the workers because PU’s lifetime is limited and the pension is not provided for. The programme is due to end in January 2007. The URC decree of 1977 established the corporation as a separate entity. 

Uganda must resolve the issue in order to facilitate the sale, which will immediately yield Ush3.6 billion ($2 million).

Uganda is seeking a mutual agreement to settle the case and have the deal between the government and Sheltam Rail signed and later the joint concession between the two governments and the concessionaire. The Uganda-Kenya concession has already encountered problems with two of the companies – a part of the consortium – obtaining an injunction in Uganda’s High Court stopping the sighing of the agreement between the lead investor Sheltam Rail and the government of Uganda. The consortium of companies in the concessionaire deal are Sheltam Rail Pty, Comzar Pty Ltd, Prime fuels (Kenya) Ltd, Mirambo Holdings Ltd and CDIO Institute for Africa Development Trust.