Geza Ulole
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Cost comparison SGR Kenya vs SGR Tanzania
Cost comparison SGR Kenya vs SGR Tanzania
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Geza Ulole
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Uganda, Kenya team up on old metre gauge rail project eyeing Congo, S. Sudan
SATURDAY MAY 15 2021
The inland container depot in Naivasha, Kenya, where an interchange linking the standard gauge and metre gauge railway lines is being developed to create a seamless passage of goods from the port of Mombasa to the Great Lakes region through Uganda. PHOTO | FILE | NMG
By JULIUS BARIGABA
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By ALLAN OLINGO
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With an eye on the Democratic Republic of Congo and South Sudan markets, there is renewed vibrancy on the Northern Corridor, as Uganda and Kenya join forces to push the rehabilitation and seamless connection of the old metre gauge railway line, over which the two countries’ officials met this week to thrash out operational details.
It is understood that Kenya, which is revamping its metre gauge railway line from Naivasha to Malaba, wants a reliable mode of transport for onward transit of cargo into the hinterland to make its logistics infrastructure operational, particularly the Naivasha inland container depot. Besides putting its logistics infrastructure to use, Kenya is also eyeing the $92.3 million Congolese market for its manufactured goods and is apparently keen to see a link with Uganda actualised in the shortest time possible.
“Kenya is interested in a seamless connection immediately,” said Stanley Sendegeya, Uganda Railways Corporation (URC) managing director.
On the sidelines of President Yoweri Museveni’s inauguration on May 12, Kenya’s Cabinet Secretary for Transport and Infrastructure James Macharia told The EastAfrican that he met his Uganda counterpart Gen Edward Katumba Wamala to discuss the metre gauge railway operations. The EastAfrican also understands that Chinese embassy officials attended the meeting.
This meeting was part of the concessions talks between China Roads and Bridge Corporation (CRBC) and URC to have the Chinese firm rehabilitate the Malaba-Kampala railway line.
“We came here to assist them conclude this deal. It has been done,” CS Macharia told The EastAfrican from Kampala. “The idea is to make sure we have a seamless operation of the metre gauge railway line from Naivasha all the way to Kampala.”
Kenya has contracted CRBC to rehabilitate the Longonot- Malaba line and the progress is good so far, said the minister.
“So we felt for it to make sense, Uganda had to also start doing the same for their line to make this project complete,” he added.
This new vibrancy reflects the two countries’ urgency to access and dominate markets beyond their borders after years of failure to build a Northern Corridor standard gauge railway (SGR) for Kenya, Uganda, Rwanda and South Sudan.
Signed in 2013 as part of the Northern Corridor Integration projects, the SGR has only been operational in Kenya from Mombasa to Nairobi since 2018, but is yet to take shape in Uganda, Rwanda and South Sudan.
“The Uganda agreement with the contractor is to have this done in the shortest time possible so as to ensure that we have the line working for business persons all the way to Kampala,” Mr Macharia said.
These developments coincided with the approval by Uganda’s Parliament of a $368.9 million loan to rehabilitate the metre gauge railway, which officials say once all components are fully revamped, would constitute a significant part of Uganda’s infrastructure diplomacy in the Great Lakes Region.
The loan involves a concessional loan of €28.9 million ($34.9 million) sourced from the Corporate Internationalization Fund of Spain, funding two projects running concurrently – a two-year project for construction of the railway, and a three-year capacity building project, starting this month.
Both projects are contracted to Spanish companies, with 30 percent local content, Mr Sendegeya said.
It is understood that the Chinese are also angling for a contract.
The other financiers are the African Development Bank, which will provide $233.2 million and the African Development Fund to provide $100.7 million – both concessional loans to finance construction and purchase of rolling stock, which includes locomotives, wagons and coaches.
“Our target is to move cargo from road to rail, and we expect to be moving 6 million tonnes a year. And once we do this, the costs will come down,” Mr Sendegeya explained, adding that transport costs will fall from 13 US cents to 5-7 US cents per net tonne kilometre.
In addition, transit cargo to DRC and Rwanda, currently moving by road, will shift to rail and free the roads and double their lifespan, Mr Sendegeya added.
In its efforts to revamp the metre gauge railway, Uganda is also reviving the route from Tororo in eastern Uganda to Gulu city in the north. The line is currently under construction. Significantly, the city also hosts the Gulu Logistics Hub, whose phase one is also under construction, and projected to be complete in March 2022. The hub – which will be rail-linked – was planned as a strategic location connecting to the growing markets of Congo and South Sudan.
Also in URC’s development plan is the revamp of the Kampala-Kasese line, which terminates near the Uganda-Congo border, and the Gulu-Pakwach line in northern Uganda, also planned to move cargo close to DRC border.
“In five years’ time, we want all these to be running,” Mr Sendegeya said.
In groundbreaking deals, the DRC, whose expansive eastern territory is reliant on the Northern Corridor for movement of goods, has agreed with Uganda and Kenya to deploy in joint security operations and road construction to guarantee ease of commerce and movement of goods.
DR Congo President Felix Tshisekedi, who was in Kampala for the inauguration of President Museveni, met with the Uganda leader and agreed on joint military operations in eastern Congo to guarantee security for the construction of three roads that are contracted to Dott Services, a Ugandan company.
Uganda is footing 20 percent of the total cost of these roads, and last week a Congolese delegation held discussions with their Ugandan counterparts, and are expected to sign an inter-governmental agreement “by close of next week,” according to a spokesperson of the Ministry of Works and Transport.
Biggest partners
The roads run from some of Uganda’s border towns into DRC, namely Kasindi to Beni (80km), integration of Beni-Butebo axis (54km), and the Bunagana-Rutshuru-Goma road (89km), with a total cost of $334.3 million, of which Uganda will contribute $65.9 million.
The DRC is one of Uganda’s biggest trading partners in the region, and is often fronted as an alternative market for Uganda since a civil war broke out in South Sudan in 2013 and later when Rwanda closed its common border with Uganda in early 2019.
Total exports for Uganda to Congo in 2018 stood at $532 million, of which informal trade exports were worth $312 million, while formal trade accounted for $221 million.
Kenya has also indicated that it will move its army into eastern Congo to secure the region, after President Uhuru Kenyatta’s visit to Kinshasa last month, where he signed bilateral security, trade maritime freight and transport deals with his host.
The maritime freight deal will see the Port of Mombasa grant certain privileges to the DRC for using Kenyan facilities, but also address delays in Congo-bound imports by dedicating clearing channels for goods headed there.
The 260km Malaba-Kampala line rehabilitation is expected to end in less than 12 months.
The signing of the deal seems to further derail Kampala’s plan to have an SGR line from the border to Kampala and possibly to Rwanda, even as it seeks to have faster evacuation of cargo from Mombasa.
In January this year, Kenya began the $35 million rehabilitation of the 460km Longonot to Malaba line, which it expects to be ready by the end of the year. Upon completion of repairs on the old line, it will then link to the SGR at Naivasha. This will enable seamless transport of cargo containers from Mombasa to Kisumu and Malaba border into Uganda.
Already, Kenya Railways is constructing a link line between the Naivasha ICD and the existing Longonot railway station, to ensure this interchange is successfully executed.
The 24.3km link will ensure cargo from the SGR moves to the MGR line at the interchange in Naivasha for onward movement to Kampala.
In May last year, President Museveni argued that increasingly cargo should be shifted from road to the railway, because of its low cost and the high maintenance costs of road networks due to the heavy toll by trucks.
Already, the National Enterprise Corporation, the commercial arm of the Ugandan military has undertaken bush clearing, screening and maintenance of two sections of Malaba-Kampala railway line totalling 100km.
Uganda, Kenya team up on old metre gauge rail project eyeing Congo, S. Sudan
The project is meant to facilitate a seamless passage of goods from Mombasa to the Great Lakes.
www.theeastafrican.co.ke
Geza Ulole
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Nyie Wakunya mmetoa ngapi?
Teargas
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This comment has really touched someone.😂😂🤣
Teargas
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Tutatumia hiyo barabara upende usipende.
Kafrican
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Sisi hatuna mpaka na DRC unataka tujenge barbara ya ku connect DRC na nchi gani?
Lakini ilisemekana wale wanajeshi tutakaotuma wanaelekea eneo hilo hilo kumaliza wanamgambo ili kuhakikisha malori yatakayotumia hio bara bara hayasumbuliwi na yeyote. Win for DRC security and development and a win for UG and KE for trade and economy.
eliakeem
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No one is dismissing the project to be the white elephant. But the issue is on debt rescheduling. Why to pay double to the previously agree instalments.
Also the interest rate far away form the inter banking offering rates (ibor) which is normally used as a yardstick.
Geza Ulole
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Wapi barabara Somalia au South Sudan mmechangia?
Kafrican
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Total exports for Uganda to Congo in 2018 stood at $532 million, of which informal trade exports were worth $312 million, while formal trade accounted for $221 million.
_________
Our trade with those countries that you mentioned are no where near that level or even potential.
Geza Ulole
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R u trying to accept a claim LAPSSET is white elephant!
Kafrican
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We are not paying double to previously agreed installment. We postponed paying the loan because of covid, now we paying the postponed installment + current installment.
And for the interest rates, half of the loan is the one that is commercial loan. You'll understand why Kenya had to go for expensive bilateral loan for the SGR once you are officially a middle income country! Kuna project zengine akina WB hukataa ku fund, walituambia tofanye repair kwa MGR ndo watalipia lakini SGR mpya tujipange.
Kafrican
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LAPSSET is for Import/export from outside, that one for UG is internal trade btn DRC and UG. There is very minimal trade btn the main LAPSSET countries. We are trying to create something from scratch! If Ethiopia or S.Sudan don't invest in their own infrastructure to support LAPSSET then it would mean they are not invested in the project and it wouldn't succeed as expected. So we can't build a road inside another country that is not invested in the first place.
In short, LAPSSET is a Greenfield Project !
eliakeem
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I do understand the arrangement of carrying forward instalments payment. JPM was a champion of it.
However, you didn't answer my query of interest rate to be way far from ibor, the world SI. Securing both commercial and concessional facilities, have nothing to do with the interest to be more and above libor.
Who told you that Tanzania is not officially declared as a middle income country?
Again, we know everything about the perception of WBG on our strategic projects. This's why we opted to use our own source revenue to implement the SGR project.
Kafrican
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Tanzania is not recognized officially as a MIC.
And about the interest rate, once the likes of WB refused, we had to look for the money from somewhere else, and it's not like international banks were lining up to fund the railway. Once we went to china for a commercial loan and being a poor country (relatively speaking) you can't expect China would just give us free commercial loan.
Infact, let's make this simple. Show me an African country that doesn't produce oil that has received a cheap commercial loan for a capital intensive project.
eliakeem
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I heard with my two pinas from the secretary general of UN when giving condolence for the death of the true son of Afrika JPM, that he managed to the country to the middle income country before the scheduled time. So do you think, he was also referring to hearsay from the streets.
Answer the question, rather than asking me the counter question.
Why paying huge interest rates above the market rate??
Kafrican
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Well I also heard that you have been relegated back to LDC cause covid affected GNI growth but anyway, Let's forget about the MIC thing for now cause that's 2020 news, which is very recent. Wait a few years and see if cheap loans will still be made available to you.
And about the interest rate, I have already told you why, but since you seem not satisfied, I have asked you to bring evidence of any other African country that doesn't produce oil that has received a cheap commercial loan. You have said our interest are above market rates? Which market is this that you are talking about? Are you talking about rich countries like US and Japan that have economic leverage and have no risk or problem paying back or are you talking about African market that is full of risks? Ndo maana nimekuuliza unionyeshe nchi ya kiafrica ambayo imepata cheap commercial loan alafu ndo ntakujibu vizuri kwanini yetu iko kuu kuwaliko hao.
Geza Ulole
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Mutaitina
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Just a slight correction Tz has never graduated from LDC Status