By Frank Kamuntu
The government of Uganda has signed and sealed a deal to borrow trillions of shillings from China for the reconstruction of a rail line from Kampala to Mombasa, Spy Uganda reveals.
Minister Monica Ntege Azuba, the State minister for Energy, said on Friday that Uganda expects to finalise a USD2.2Bn ( about Shs8.103 Trillion) loan facility with China’s Exim bank by the end of the year to pay for part of a railway line to connect Kenya’s Mombasa seaport with Kampala.
The new Standard Gauge Railway (SGR) line will replace an existing old line to help to make shipments faster and cheaper.
Our business desk has learnt that Uganda resubmitted a loan request to China for a 271-kilometer (168-mile) railway linking its capital, Kampala, with the Kenyan border after re-negotiating the contract price and improving security.
The government of East Africa’s third-biggest economy submitted the application to the Export Import Bank of China in September to provide 85% of the project cost, Perez Wamburu, coordinator of the Standard Gauge Railway Project, said by email. The project cost was cut by USD26m.
The initial loan request was delayed after the lender sought a comprehensive feasibility study, which has since been submitted, the coordinator said and additional link was added from Kampala to the nearby Bukasa port on Lake Victoria as well as fencing for the entire railway route to protect it from vandalism.
The spur to Lake Victoria, which the country shares with Tanzania and Kenya, is set to handle imports and exports via the neighboring countries Uganda, Kenya, Rwanda and South Sudan agreed in 2014 to build standard gauge railways in their territories as part of a regional plan to cut transportation costs.
“Kenya and Uganda continue to discuss harmonization of construction timelines and construction is expected to resume once the outstanding issues are addressed,” Wamburu said and Uganda has already acquired 126 kilometers of the corridor for the Malaba-Kampala SGR with land acquisition for the route expected to be concluded by June 2022, the official said.
Uganda’s Works and Transport Minister Monica Azuba Ntege told a news conference in Kampala negotiations with Exim bank were in “advanced stages.”
“Their team has already been here but there are some other things that they wanted and we have already supplied them. So I really believe that any time this year they will be calling on us to sign that agreement.” she said.
In the long term, there are plans to extend the line deeper into the region’s hinterland to include lines to South Sudan, eastern Congo and Rwanda.