Uganda's Railway Expansion: A €2.7bn Contract with Yapı Merkezi
The Ministry of Works & Transport in Uganda has inked a €2.7 billion contract with Yapı Merkezi, a Turkish firm. The agreement involves the construction of an electrified standard gauge railway stretching 273 kilometers from Malaba, located on the Kenyan border, to Uganda's capital, Kampala.
The Eastern Railway Project
Dubbed the Eastern Railway, this project is anticipated to slash cargo transport costs by half, as stated by Ramathan Ggoobi, the Permanent Secretary at the Finance Ministry, during the contract signing ceremony on October 14.
The contract encompasses the design and construction of an electrified railway with a 1,435 mm gauge, adhering to both European and American standards. The railway is designed to operate at a speed of 120 km/h. The project includes the establishment of two major stations, four medium-sized stations, one marshalling yard, and three freight terminals. Additionally, the contract mandates the supply of rolling stock.
The project is slated to kick off in December and is expected to be completed within 48 months.
Uganda's Standard Gauge Ambitions
Uganda, a landlocked country, initiated the standard gauge railway project in 2006. In 2013, it signed protocols with neighboring countries to develop a transport corridor leading to Kenya's Indian Ocean port of Mombasa.
In 2015, the Ugandan government entered into a US$2.2 billion construction agreement with China Harbour Engineering Co. However, this deal was terminated in 2023 due to a lack of progress and the withdrawal of Chinese financial support.
Subsequently, discussions were initiated with Yapı Merkezi, which has experience working on a similar rail project in Tanzania. The Turkish contractor submitted a construction and financing proposal in July 2023. The negotiations were finalized by June 2024, and the letter of award was received on September 24.
Initially, Yapı Merkezi quoted a cost of €3.4 billion for the project, but this was successfully negotiated down. The project's financing is expected to be sourced from syndicated loans from European and American financiers, led by Citibank. This will be supplemented by government funding and support from the United Kingdom Export Finance. The Ugandan government has allocated US$600 million for the project in the current financial year.
Future Railway Expansion
In addition to the Eastern Railway project, Yapı Merkezi has signed a memorandum of understanding for the potential construction of a Western Railway. This railway will connect Kampala to Kasese and aims to provide the Democratic Republic of Congo with rail access to the port of Mombasa.
The ultimate vision is to establish a standard gauge railway network that will connect Kenya, Uganda, the Democratic Republic of Congo, Rwanda, and South Sudan.