BY JACKSON OKOTH

South Sudan will commence building a modern railway line linking it with east Africa next month after a Kenyan initiative hit a brick-wall.

This railway line is expected to facilitate the movement of goods and people to and from Juba to any part of the wider East African region including Mombasa, Uganda, Sudan, Ethiopia and Djibouti.

This new railroad — to be known as the East African Rail (EAR) — will connect Juba in South Sudan to Gulu and Tororo, from where it will join the existing Kenya-Uganda railway.

This is considered the largest project being undertaken by New Sudan Foundation on behalf of the Government of South Sudan (GOSS).

The decision by South Sudan to construct the $7 billion 750km railway link between Juba and Tororo in Uganda follows delay by the Kenya Government to implement an earlier deal to construct a rail connecting Juba through Lokichogio to the planned Lamu Port.

"We have abandoned plans to build a railway from Juba to Lokichogio through Kenya, hitting the existing network at Rongai," said Castello Garang Ring Lual, special advisor to South Sudan President Salva Kiir.

South Sudan has also dumped an earlier deal to build a parallel railway line linking it with Lamu.

The first phase of the EAR project will involve rehabilitation of the Tororo-Gulu railway line at a cost of $3 billion.

The second phase will be involve construction of a modern high speed standard gauge line from Gulu in Uganda to Juba at a cost of $4 billion.

The project, aimed at linking Juba, through Nimule, Gulu and Tororo is being financed by the US-based Ayr Development Group. Other partners in the project are the New Sudan Foundation, Thyssan-Krupp — a German steel firm and Mosmetrostroy, a Russian construction company.

Power broker

The late Alex Mureithi — nephew of President Kibaki, fronted the Juba-Lamu rail link project. Mureithi was then a well-connected power broker and political lobbyist.

The idea had first been mooted by the late John Garang, then leader of the Sudan People’s Liberation Movement (SPLM).

But when he died five years ago in a helicopter crash, after only three weeks as Sudan’s First Vice-President, he died with the drive to link Kenya and South through rail.

With a referendum coming next year, and the likelihood that separatists could win the vote, pressure is mounting for South Sudan to find an alternative route to the sea.

"We will be landlocked if people vote to secede, leading to possible hostilities with the north before relations normalise," said Lual.

While a railway line through Lokichogio to Rongai provides the shortest and cheapest link to the port of Mombasa, South Sudan has now abandoned this route due to the shareholder wrangles and flawed business plans of Rift Valley Railways (RVR), the concessionaire operating the Kenya-Uganda Railway.

It was during the time of Transport Minister John Michuki and his PS Gerrishon Ikiara that the process of privatising the Kenya-Uganda railway begun.

Although South Sudan, still involved in war with the North, requested that privatisation of this line be held until Juba is connected, that did not happen as South Africa’s Sheltam suddenly appeared on the scene.

When it became clear that the concession could not be postponed, South Sudan began discussions with officials in the Uganda Government.

With an annual turnover of over 80 billion euros, Thyssan-Krupp’s portfolio will be responsible for the project design and planning, while a Russian firm will execute the actual construction of the rail.

When complete, the South Sudan-Uganda rail will be operated as a public-private-partnership (PPP), with both Uganda and Sudan becoming shareholders together with Ayr Development Group.

Hostile territory

With this railway gateway, South Sudan will ship its voluminous natural resources, without crossing what could be a hostile territory in Khartoum.

"We need the railway and the Mombasa or Lamu sea port to export crude oil. However, the bottlenecks that still exist with RVR must be sorted out fast," said Lual.

Efforts by South Sudan come at a time the East African region is pushing for huge infrastructure projects.

While the African Development Bank (AfDB) is funding Burundi’s multibillion-dollar infrastructure plan, Kenya is raising funds from the domestic money market through infrastructure bonds, with a huge presence of the World Bank.

Recent discoveries of extensive oil deposits in Uganda and South Sudan have also triggered a huge appetite for large construction multinational firms.

Moribund network

While Kenya is the region’s business capital, it continues to suffer lost economic opportunities and clout with a congested Mombasa Port and a moribund railway network.

South Sudan has already indicated that if Kenya does not move fast on the railway connection between Lokichogio and Lamu, it will seek for an alternative corridor through Addis Ababa and Djibouti.

The South Sudan railway link to Uganda is a standard gauge modern line that will have fast passenger locomotives, cruising at 160 km/hr and 120 km/hr for freight trains.

However, this speed is expected to slow down when the trains reach Tororo, entering the 40 km/hr dilapidated Kenya-Uganda Railway.

The New Sudan Foundation has been pushing the Kenyan Government to clear Ayr Development Group to construct a new line from Lokichogio to Lamu.

"We have also made a proposal to Prime Minister Raila Odinga for the group to construct a railway link between Juba and Lokichogio where Kenya will pick up from," said Lual.

Thyssan-Krupp, a Germany steel maker, was among the first big multinationals to show interest in proposed railway project linking Mombasa to Juba. However, its bid to win this big-ticket contract went up in smoke partly due to Kenya’s political ping-pong.

A recent commitment by China to develop the Lamu port as well as build an oil pipeline connecting the facility to South Sudan and Ethiopia, appear to have edged out the Germans.

Troubles for Thyssan-Krupp blew up when key Kenyan ministers pushing for its interests in the Kenya-Uganda railway project, were dropped from the cabinet.

This incident followed a split within President Mwai Kibaki’s administration after one side was defeated in a national referendum on a new constitution.

China has not made any firm financial commitments on the Lamu project until it completes a feasibility study.

Oil refinery

Construction of the $4 billion Lamu port is part of the Northern Corridor project, which includes construction of road and rail links, an oil pipeline to South Sudan and Ethiopia and an oil refinery at Lamu.

The entire plan is expected to cost $20 billion. A less congested Lamu port provides South Sudan with the shortest link to the sea and an alternative exit point for the country’s extensive crude oil and mineral deposits.

Presently, crude oil from South Sudan is refined and exported through a port in Khartoum.

All eyes will be on RVR and its plan to overhaul the Kenya-Uganda Railway, a severe bottleneck to countries depending on the link and the port of Mombasa.

Latest details indicate that a shareholder agreement has already been worked out between Ambience Ventures, subsidiary of Cairo-based Citadel Capital and TransCentury.

Their plan is to invest an estimated $250 million to revitalise the Kenya-Uganda metre-gauge rail concession. They are also to facilitate the development of a standard gauge line linking Kampala to Mombasa.

-jokoth@standardmedia.co.ke