Funding deal with Exim Bank to be signed in October, DR Congo also joins Standard Gauge Railway
Roofings Ltd, a steel manufacturer based at Lubowa near Kampala, imports almost all its raw materials from abroad through Mombasa Port. To transport a tonne of raw materials by road for one kilometer, the company spends about 20 US cents, which translates into about $200 (about Shs 700,000) per tonne for the 930 km distance from Mombasa to Kampala.
For the thousands of tonnes it transports every month, it’s a colossal amount of money spent on transport alone, and which cost it must obviously transfer to the consumer. If there was a train to carry the goods instead of trucks, the transport costs would reduce to about Shs 158,000 per tonne.
Indeed for the two decades, the need for a functional railway transport system has featured prominently on the Private Sector Platform for Action, an array of proposals compiled by the Private Sector Foundation Uganda (PSFU) to the government for making Ugandan products more competitive.
Year after year, they have been pleading that rail transport be introduced as it’s the most cost-effective mode of transport for bulk goods to and from the sea. When the government concessioned Uganda Railways Corporation to RVR in 2005, there was hope that the long-overdue reversal would happen.
Kyamugambi dismissed as “useless pessimism” claims that Kenya, whose project is ahead of Uganda’s, would complete its section to Malaba before Uganda’s section to Kampala is complete
Ten years later, things have only got worse because the proportion of goods transported by train from Mombasa has instead reduced because RVR got into financing challenges. Consequently, road transport continues to dominate the Northern Corridor, accounting for over 95% of all the cargo movement. Only 5% of fright is being handled by the existing dilapidated and inefficient meter gauge railway at a speed of just 40 km per hour or 14 days from Mombasa to Kampala.
This situation has made Uganda very uncompetitive, which manifests in having one of the highest costs of doing business in the world. Following the failure of the RVR project to materialise in time, the governments of Kenya and Uganda signed a memorandum of understanding (MoU) in October 2009 to construct Standard Gauge Railway (SGR) from Mombasa to Kampala.
Later, Rwanda and South Sudan joined the effort to fast track the development of the railway to Kigali and Juba as part of the Northern Corridor Integration Projects (NCIP) initiative.
Speaking at a press briefing in Kampala on June 23, Kasingye Kyamugambi, the SGR project coordinator, said that though work officially started in October 2014, financial closure is set for October after the signing of agreements with Exim Bank of China, the project’s financer, to the tune of $2.3 billion.
The contractor for the project is China Harbour and Engineering Company (CHEC) and the government is putting the priority on the 273 Km eastern route (Malaba-Kampala).
This project appears to have learnt some lessons from the painful experiences of other public bodies such as UNRA. Instead of hiring consultants for example, they are carrying out some of the activities in house.
With chinese commercial consular at usikuru https://t.co/qhcYzcqiTi on going. SGR will connect to phosphate industry pic.twitter.com/Hd3qGnTtyN
— kasingye kyamugambi (@Head_SGR) June 29, 2016
For example, compensation for the land is already underway in various districts in Eastern Uganda in line with the commitment to hand the contractor an encumbrance-free route. About 76 km of the route is in wetlands and forests, and so will not require compensation.
The SGR, which covers a total distance of 1,724 Km, will be predominantly for cargo though provision is also being made for passengers. Design works for the various sections across the country are underway with the train network being set up to be powered by electricity and not diesel engines, according to Kyamugambi.
He said the country incurs $2 billion in lost opportunity because of the lack of a functional railway transport. He dismissed as “useless pessimism” claims that Kenya, whose project is ahead of Uganda’s, would complete its section to Malaba before Uganda’s section to Kampala is completed.
After successful negotiations with the DR Congo, the northern route to Juba is being re-designed so as to connect Pakwach to Vurra in West Nile where the railway line will enter the vast country. That brings the total number of countries that have signed on the network to five. Kyamugambi said Ethiopia is also likely to join in the near future.
The project will connect to the DR Congo at Mpondwe in Kasese District and Vurra in Arua District, to Rwanda through Mirama Hills in Ntungamo District and to South Sudan through Nimule inAmuru District.
In Kampala City, a network worth $500 million, is also being set up for a light rail mass transit system, which is expected to start operations by 2019. It will transport 700,000 passengers per day, which will help to alleviate congestion in Kampala. The trains, which will charge relatively lower fares compared to the available modes of transport, will ply the Kawempe, Namanve, Kajjansi and Kyengera routes. The designs will be completed at the end of this month, according to Kyamugambi.
Moses Ogwal, the director of policy at the PSFU, said the private sector is excited about the progress that the SGR is making given the opportunities available for local content and the long term impact on easing the cost of doing business for private sector players. “We are happy because we have waited for it for a long time and we are in dialogue with the government to ensure that it brings the full benefits to the country,” he said.