First phase of Ugandan railway to Kenya to cost $2.3 billion

(EBC; January 17, 2017)- Uganda said the first phase of a railway designed to improve connections between the landlocked East African country and three of its neighbors will cost $2.3 billion, with Chinese contractors expected to begin construction this year.

China Harbour Engineering Co. is preparing to start building the 273-kilometer (170-mile) standard-gauge section that will link Uganda’s capital, Kampala, and the Kenyan border, a phase that will take 40 months to complete, project coordinator Kasingye Kyamugambi said in an e-mailed response to questions on Jan. 13. Uganda is borrowing money from the Export-Import Bank of China for the project with details still being finalized, he said, declining to comment on the size of the loan.

Uganda, which plans to start producing oil by about 2020, is seeking to build a combined 1,724 kilometers of standard-gauge railway as part of a regional project eventually connecting the capitals of Kenya, Uganda, Rwanda and South Sudan. The entire regional network will span about 3,200 kilometers, according to Kyamugambi.

The government is still conducting studies on the western Ugandan route that will connect with Rwanda’s border and the northern one to South Sudan, and hasn’t concluded what the final cost will be, he said. The Transport Ministry estimates the new line will reduce cargo-transportation costs by about two-thirds.

“As soon as studies are complete and approved, and funds secured, works on the other sections of the SGR will commence,” Kyamugambi said. The rails on standard-gauge tracks are spaced about 1,435 millimeters (56.5 inches) apart, while many older railways use a 1,000-millimeter spacing.

The standard-gauge railway’s operators will compete with the old meter-gauge railway, whose operator, Rift Valley Railways Consortium, has a concession to run it until 2032, he said.

Uganda’s Finance Ministry said Monday that economic growth may accelerate to 5.5 percent in the next fiscal year, from a projected 5 percent in 2016-17, spurred by increased spending on the oil industry. The government has estimated that oil companies will spend $8 billion in the country ahead of production and that it will receive $43 billion of revenue from the resource over 25 years.

Source: Bloomber