Uganda approves funding for Malaba- Kampala SGR

Last Updated 8 years ago by Kenya Engineer

President Yoweri Museveni has approved the funding for the Malaba- Kampala phase of the Standard Gauge Railways (SGR) project. The approval for borrowing $2.9 billion for the construction of the railway from the Malaba border with Kenya to Kampala is a clear signal that the regional infrastructure project is back on track. The 273-kilometer line will cost an estimated $8.2 million per kilometer. It would be built by the Chinese engineering contractor, China Harbour Engineering Company. Ugandan officials have said that work will begin soon after the terms of financing with China Exim Bank, still under negotiation, are finalized.
This phase of the SGR had run into uncertainties following heightened temperatures in the regional political scene and Chinas conditions. Uganda said it was considering building a railway through Tanzania after failing to get assurances from Kenya that it would extend the Mombasa-Nairobi line to Malaba. Kenya has since committed that its line, whose first phase from Mombasa to Nairobi was competed in June, will be extended in phases to Naivasha, Kisumu and eventually Malaba.
The approval for the borrowing by the Ugandan President comes amid indications that China had agreed to fund the line only if it was a joint project between governments including Rwanda, the last stop of the Northern Corridor under the East Africa Railway Masterplan. The project funder seeks to have the railway once complete to come under a single operator. The operational section between Mombasa to Nairobi is under the China’s Communications Construction Company (CCCC). This condition by China will likely see CCCC operate the entire line.
To raise funds Uganda has been collecting a 1.5 per cent infrastructure levy on imports since the 2014/15 financial year under an arrangement by East African partner states to support the construction of the railway. This loan for the SGR has raised concerns in Uganda as it did in Kenya when Kenya undertook its section. Uganda has previously borrowed money from China Exim without a notable cost escalation. A feasibility study originally put the estimated cost of the needed loan at $2.3 billion. Kasingye Kyamugambi, the SGR co-ordinator, said Uganda is expected to provide counterpart funding of 15 per cent or $345 million largely for compensation of people affected by the project. This would take the extra borrowing to $900 million. He said the cost of each project was determined by the terrain.
In Uganda, the SGR network will comprise of three major routes with a total route length of 1,614 KM. The Eastern Route will start from Malaba to Kampala, the Northern Route will start from Tororo to Gulu to Nimule with a spur to Pakwach and the western Route will start from Kampala to Mpondwe (at the DRC border) through Mityana, Kamwenge and Kasese, and a line from Bihanga southwards to Mirama Hills (at the Uganda- Rwanda border) through Mbarara and Ntungamo with a spur to the Muko iron ore deposits through Kabale.
Ugandan officials have defended the costs by pointing out that Uganda’s SGR would be electric and that the route’s differences in terrain and number of bridges needed also add to the final price tag. But the costs appear to be ticking upwards. Mr Kyamugambi said China Harbour Engineering Company would build the 273-kilometre line over a period of 40 months.