SGR project full takeoff now for next year

Kampala, Uganda | URN | The conclusion of financing arrangements for Uganda’s Standard Gauge Railway (SGR) project has been pushed from November 2026 to January 2027, delaying the start of the 48-month construction timeline, although preliminary works by the contractor are already underway.

The project requires approximately €2.7 billion in financing, with the government still pursuing commitments from development financiers to bridge the remaining funding gap before the entire package reaches financial closure. According to the SGR Project Management Unit, the project is undergoing appraisal by additional co-financiers, including the OPEC Fund for International Development, whose delegation is in Kampala to assess a proposed €150 million loan.

The loan, equivalent to approximately Shs 708.6 billion, is intended to help close the remaining financing gap for the railway project. Kemi Afun-Ogidan, the OPEC Fund’s Senior Country Manager, said the delegation would assess the project’s designs, implementation arrangements, disbursement schedule and environmental and social safeguards before making recommendations to the fund’s Board.

“We are targeting Board approval by November 30, 2026. If approved, this will be our largest financing to Uganda since 1976, when we started here. So, we do not have a lot of time,” Afun-Ogidan told the SGR Project Management team at the project’s headquarters. The OPEC Fund’s proposed financing comes alongside an agreed €640.75 million commitment from the Islamic Development Bank (IsDB), equivalent to approximately Shs 2.8 trillion.

However, the IsDB financing will not be disbursed until the entire project achieves financial closure, which is now expected in January 2027. Uganda had initially targeted November 2026 to conclude the financing arrangements, paving the way for the commencement of the railway’s construction phase.

Despite the delay, the government has provided €75 million, approximately Shs 348.4 billion, through the national budget under a Limited Notice to Proceed (LNTP) arrangement to facilitate preliminary works while negotiations with international financiers continue. The Turkish contractor, Yapi Merkezi, has already completed several early-stage activities at the project’s main camp in Iganga.

These include establishing a concrete batching plant, constructing a sleeper factory, setting up a materials laboratory, building workers’ accommodation and completing critical geotechnical studies. The facilities are intended to support the subsequent construction of the railway line once the full financing package is secured. The SGR Project Coordinator, Perez Wamburu, said the government had also made progress in acquiring land required for the railway corridor.

She said close to 70 per cent of the land between Malaba and Kampala had been acquired, covering 12 districts and two cities. Land acquisition entered its final three districts—Mukono, Wakiso and Kampala—in November 2025, with compensation for affected property owners still ongoing. The project’s financing framework provides for Export Credit Agencies to contribute approximately 60 per cent of the total funding, Development Financing Institutions about 25 per cent, and the government the remaining 15 per cent.

The government’s contribution is expected to include a €405 million Sukuk bond, an Islamic financing instrument structured to comply with Islamic financial principles. Once financial closure is achieved, the contractor’s 48-month construction period is expected to begin, setting the timeline for completion of the railway project. The SGR is intended to improve railway connectivity between Uganda and the Kenyan border at Malaba, strengthening transport links for cargo and passengers and supporting regional trade.