Uganda seeks US $2.3bn from China to fund SGR project

Uganda has resubmitted a loan request to China for the 271km Standard Gauge Railway (SGR) project linking its capital, Kampala, with the Kenyan border after re-negotiating the contract price and improving security.

Perez Wamburu, coordinator of the SGR project revealed that the government of East Africa’s third-biggest economy submitted the application to the Export Import Bank of China in September to provide 85% of the total cost. Under the new proposal the project cost was reduced by US $26m.

Uganda SGR project

The initial loan request was delayed after the lender sought a comprehensive feasibility study, which has since been submitted, the coordinator said. An additional link was added from Kampala to the nearby Bukasa port on Lake Victoria as well as fencing of the entire railway route to protect it from vandalism.

The spur to Lake Victoria, which the country shares with Tanzania and Kenya, is set to handle imports and exports via the neighboring countries.

Cutting transportation costs

Uganda, Kenya, Rwanda and South Sudan agreed in 2014 to build standard gauge railways in their territories as part of a regional plan to cut transportation costs. “Kenya and Uganda continue to discuss harmonization of construction timelines and construction is expected to resume once the outstanding issues are addressed,” Wamburu said. Uganda has already acquired 126km of the corridor for the Malaba-Kampala SGR with land acquisition for the route expected to be concluded by June 2022.

The Uganda Standard Gauge Railway will link neighboring countries of Kenya, Rwanda, Democratic Republic of the Congo and South Sudan. The new Standard Gauge Railway is intended to replace the old meter gauge railway that was built by colonialist a long time ago and has proved to be old, inefficient and expensive to maintain.