Uganda fails to secure Chinese funding for SGR, to refurbish the century-old rail

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Uganda will begin refurbishing its century-old rail network this month to boost bulk cargo transportation, after failing to secure $2.2 billion in Chinese funding for a new standard-gauge (SGR) line



Uganda needed about Ugx. 8 trillion to construct the SGR from Malaba to Kampala. The Construction of the line should have been completed by June this year if finances were available
The rehabilitation will be carried out in phases over several years and cost at least $267 million, Charles Kateeba, managing director of Uganda Railways Corporation-the Reuters reported



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Last October, Uganda received a $ 24.7 million grant from the European Union to rehabilitate the 375-km railway line from the eastern border district of Tororo to the northern district of Gulu. The railway corporation is talking to international development lenders for the rest.
Britain built the meter-gauge, 1,266 km network a century ago, mainly to move copper and other commodities.
Due to lack of maintenance over the years, missing tracks, most of the network is now in disuse, Kateeba told Rueters that “We shall replace some areas which have been either removed by vandals or are badly worn.”



French firm Sogea-Satom will undertake the works, which include installing rocks ballast on sections, re-laying of tracks, flattening sections and repairing about 500 freight wagons.
Bulk cargo transporters have been eager for cheaper transport and were disappointed when Chinese Exim Bank did not offer funding for the SGR regional project.
The planned SGR with an entire length of 1,724 kilometers was supposed to consist of four major sections: Malaba-Kampala section, Tororo-Gugu section, Kampala-Mpondwe section, Bihanga-mirama Hills section.



The SGR was originally designed to connect Kenya’s Indian Ocean seaport of Mombasa to a vast hinterland including Uganda, South Sudan, Rwanda and Burundi.
Ugandan has been negotiating with China for more than five years, hoping for funds to construct its own SGR branch. But Kateeba said several factors, including Uganda’s delayed oil production, delayed a credit deal.
Speaking at the 2019 Stanbic Bank’s Annual Economic Forum, Stanbic’s East African economist Jibran Qureishi said the delays as Uganda bids to borrow from China to finance the SGR could be a blessing in disguise.



The regional economist warned that if the region fails to take right decisions in infrastructure investment and borrowing, the hard working tax payers will definitely get affected over a long period of time.
He suggested that the ministry of finance in Uganda and East Africa should consider employing experts to evaluate projects before they borrow.



The World Bank refused to finance a railway project from Tanzania’s capital to Morogoro because the Bank’s evaluators did not see economic sense in spending over one billion dollars to connect the two cities.
Uganda has also borrowed from China and other sources to finance hydropower dams like Isimba and others. But Jibrani Qureishi like other economists have question such borrowings.



Uganda and the neighboring countries have been beneficiaries of loans from China’s Belt and Road Initiative. Some have warned that the country has fallen into China’s “debt traps” because it has not carefully evaluated the projects for which it is borrowing.
In 2014, EAC member countries in the Northern Corridor signed a protocol to have the Standard Gauge Railway

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