Uganda to finalize China loan for new railway by year-end

The new so-called standard gauge railway (SGR) line will replace an existing old line to help to make shipments faster and cheaper. [Photo: Standard]

KAMPALA - Uganda said it expects to finalize a $2.2 billion loan deal with China’s Exim bank by the end of the year. to pay for part of a railway line to connect Kenya’s Mombasa seaport with Kampala.

Uganda has also reached an agreement with Kenya where the two countries have committed to work on the project simultaneously with the aim of completing it by 2022.

The new so-called standard gauge railway (SGR) line will replace an existing old line to help to make shipments faster and cheaper.

China is helping to fund the project in both countries. As in other areas of Sub-Saharan Africa, China has become a major investor in Uganda. It has mostly put money into roads, hydropower dams, fibre optic cable networks and other infrastructure, usually offering cheap loans.

Uganda’s Works and Transport Minister Monica Azuba Ntege told a news conference in Kampala negotiations with Exim bank were in “advanced stages.”

“Their team has already been here but there are some other things that they wanted and we have already supplied them. So I really believe that any time this year they will be calling on us to sign that agreement.” she said.

A Uganda team had held discussions with Exim Bank while in China for the China-Africa forum in September, she said.

On the deal with Kenya, she said the “harmonisation” of the project between the governments of Uganda and Kenya had been undertaken. “The plan is for the two countries to have completed their respective (rail) sections ... by June 2022.”

In the long term, there are plans to extend the line deeper into the region’s hinterland to include lines to South Sudan, eastern Congo and Rwanda.

Uganda is seeking $2.2 billion from Exim Bank to fund its section of the project, about 273 kilometres from Kampala to Malaba on the border with Kenya.

China’s China Harbour and Engineering Company Ltd has been awarded the contract.

The new railway will replace a decrepit, narrow-gauge railway line built about a century ago by the British to ship copper from mines in western Uganda and other commodities from their East African colonies.