UGANDA RAILWAYS Corporation's privatisation is becoming more complex each day with some stakeholders calling for a speedy divestiture while others say the current management should be given a chance to steer the corporation to recovery.

However, major donors who have withheld funding have expressed concern over the current state of affairs in the divestiture process.

Both the European Union (EU) and the German KFW, which are the major funders of the state-run corporation, have asked the government to clarify the position before they release funding to two major projects. 

The two donor organisations are supposed to fund two major projects of the corporation aimed at improving operations. The EU is to fund the rehabilitation of the Kampala-Malaba railway line, the lifeline of URC, while KFW has promised to fund the rehabilitation of URC wagons.

The EU head of delegation in Uganda told The EastAfrican last week that the funding of the rehabilitation of Kampala-Malaba line is still on course but they would like to have a clear picture of the future of the Uganda Railways Corporation. 

The Malaba-Kampala line, which brings in between 60 and 70 per cent of Uganda's imports from Mombasa, is in need of repair. The El Nino related rains of 1997/1998 affected some key sections of the line, which the EU promised to fund. The rail line between Malaba and Kampala is used not only for Uganda's imports and exports but also transports goods for Rwanda and the Democratic Republic of Congo.

A maritime source told The EastAfrican that KFW, which had promised to fund the rehabilitation of wagons had also written to the Ministry of Finance, Planning and Economic Development seeking to know the position on the the participation of private players in the running of Uganda Railways Corporation.

Privatisation Unit officials, without giving details of the letter written to them by KFW, confirmed that they had received communication from the donor organisation. "They wanted clarification on when the private sector would take charge," said Mr Emanuel Nyirikindi, the privatisation unit official responsible for the privatisation of Uganda Railways Corporation.

He said the privatisation process of URC was going on smoothly and that they were reviewing proposals from different stakeholders, including one from the current management of Uganda Railways Corporation. A private operator, East African Railways Development Corporation (EARDC) with offices in Nairobi, Kampala and Dar es Salaam, has already declared its intention of taking over the corporation.

Three options have been floated for the privatisation of URC: giving it to a railways management firm for a period of five years to prepare it for full privatisation; leaving the current management to continue with the reforms; and full privatisation immediately.

The government however, seems to prefer the option of giving the corporation to a private operator for a five-year period before eventually privatising it. Either way, all stakeholders agree that privatisation of URC is the only solution to the problems of the corporation.