The Government of Uganda will spend a staggering 2.7bn Euros (10.8tn ) on the construction of the 272-km Malaba-Kampala Standard Gauge Railway (SGR) line.
This was disclosed by the SGR project coordinator Canon Perez Wamburu during the contract signing ceremony with Turkish firm, Yapi Merkezi in Kampala this Monday morning.
“We sent out a request for proposal to Yapi Merkezi which quoted Euros 3.4bn but we negotiated and reduced that figure to Euros 2.7bn,” said Wamburu.
“This means we saved about $700m during our negotiations with Yapi Merkezi,” he added.
However, China Harbour and Engineering Company (CHEC), which had expressed interest in constructing the railway had committed to construct the line at $2.3bn (Shs 8.4tn).
In 2022, Uganda disengaged CHEC after the Chinese construction company failed to obtain financing from Exim Bank.
In August 2024, Tanzania launched a 541-km standard gauge railway running between Dar es Salaam and Dodoma. Undertaken by Merkezi, the project cost $3.1bn (11.3tn).
Moreso, in 2016, Ethiopia launched a Chinese-built 750-km train line linking Addis Ababa to Djibouti at a cost of $4bn.
Asked why the cost of the railway line had dramatically shot through the roof, Wamburu told ChimpReports that the “scope of the works has increased.”
Wamburu said the original plan did not cater for a 2-km tunnel in Mbuya which he said was costly.
“The old construction plan would have seen us demolish many factories and a diplomatic building which would have disrupted lives and business,” said Wamburu, adding, “The best thing to do was leave these structures intact and go underground.”
Wamburu further said the Turkish firm will be required to build a marshalling yard in Tororo which was not planned for in the original contract with the Chinese.
A marshalling yard is a network of tracks and switches where railroad cars are sorted and made up into trains for their respective destinations.
Money value
Wamburu also observed that the value of money has changed since 2015 when CHEC expected to build the railway line in 2015.
He was referring to the purchasing power of money which decreases over time due to inflation.
“The prices of materials and labour have gone up, so that contract value had to go up as well,” he explained.
The Works Ministry Permanent Secretary, Bageya Waiswa said the SGR Project is an Engineering, Procurement, and Construction (EPC)/ Turnkey project that is to be financed partly by the Government of Uganda.
“The government plans to use its domestic resources and financing from Development Partners such as development financing and Export Credit Agencies,” said Waiwa, adding, “The EPC/T model of Contracting ensures timely completion and minimises all associated risks that shall be borne by the Contractor.”
The contract was signed by Waiswa on behalf of Uganda’s Ministry of Works and Transport and Dr Erdem Arioglu, Vice Chairman Yapi Merkezi who represented M/s Yapı Merkezi İnşaat ve Sanayi A.Ş., Türkiye which is in a Joint Venture with M/s YM Global Projects Limited.
The project is expected to be completed within 48 months (four years).
“The SGR Malaba-Kampala Project is a critical component of the East African Community Railway Master Plan and the Northern Corridor Integrated Projects Railway Network, which will connect Uganda to the Port of Mombasa through Nairobi, also to South Sudan, Rwanda and DR Congo, revolutionising regional trade and economic integration through cheaper and more efficient transportation,” said Waiswa.
“Once constructed, we envisage that the Project will come with multiplier benefits to the Regional and National communities, which is very important for regional connectivity, trade facilitation and therefore economic growth,” he added.
“These benefits include among others: increased trade, reduced transportation costs, job creation, Improved safety, reduced transit/travel times, enhanced quality of life of communities in the region and reduced carbon emissions and pollution.”
The Pemanent Secretary Ministry of Finance, Ramathan Ggoobi said the Malaba-Kampala SGR will become “the backbone of our land transportation, providing cheap and fast movement of goods and services.”
He said the project is part of a regional SGR project among Uganda’s Northern Corridor Partner States of Kenya, Rwanda, South Sudan and Dr. Congo. The SGR will also connect to Tanzania through Lake Victoria.
“With the SGR we expect to reduce the cost of transporting goods from Mombasa to Kampala and Vice Versa by about 50% and also reduce transit times from about 7 days to 1 day,” said Ggoobi.
Kenya route
Kenya has since completed construction of the Mombasa-Nairobi- Naivasha SGR line (592 km) and plans are underway to extend the SGR from Naivasha to Malaba at its border with Uganda. Tanzania has also made tremendous progress.
The Governments of Uganda and Kenya have had several engagements on harmonisation of SGR standards and construction timelines to ensure seamlessness and interoperability.
The railway line will go through Tororo, Butaleja, Namutumba, Luuka, Iganga, Mayuge, Jinja and Buikwe. Other districts are Mukono, Wakiso and Kampala.
Works Minister Katumba Wamala who presided over the signing ceremony urged the Turkish firm to ensure 40% of the contract value goes to local content.
“We already have cement and iron bars here. We have stones and food. Buy them from our people here,” said Katumba.
He also asked the contractor to complete the works on time, within budget and with high quality.
Wamburu said the government has acquired about 150km (99%) out of 272 km of the Right Of Way between Malaba and Mayuge which translates into about 54% of the entire ROW from Malaba-Kampala.
