Uganda plans to restore its old railway to 20.5 billion shillings

Uganda will invest 20.5 billion shillings in the restoration of an old railway line connecting Kampala to Malaba on the Kenyan border, as a result of delays in the financing of the railway line. normal.

The improved metric rail line is expected to increase monthly cargo capacity to 20,000 tonnes by 2026 from 120,000 metric tonnes to 120,000 metric tonnes, said Stanley Sendegeya, chief financial officer of Uganda Railways. Corporation, in an interview.

"We continue to refuse customers because with the little money from the government, which amounts to 2 million dollars (200 million shillings) a year, we can not handle many projects," he said. declared. "Customers choose to use trucks."

It is now doubtful that Uganda's joint project with Kenya and Rwanda, designed six years ago, to build a normal-gauge railway linking the landlocked countries of East Africa to the Kenyan port of Mombasa, bears fruit.

The SGR, which connects Mombasa to Nairobi, was opened to pbadengers in May 2017 and cargo in January 2018.

In recent months, the SGR project has faced major funding challenges following the ex-Chinese bank, its main benefactor, which has delayed funding for the third and final stretch of the Kenyan section from Naivasha to the heart of the Rift Valley in Uganda.

Uganda also experienced delays in financing the 230 billion-shillings segment of the Kampala-Malaba normal-gauge railway, which the China Export-Import Bank was required to finance to the extent of 85% of the budget.

The Kampala section of the SGR project was to be built at the same time as the third phase of the Kenya section.

Uganda's latest decision came amid reports that Kenya was downgrading its reported revenue from SGR between Mombasa and Nairobi. The latest figures have raised concerns about the profitability of the project and the country's ability to repay the 320 billion shillings it borrowed from China to build the railway.

The Kenya National Bureau of Statistics released data last month showing that the SGR had generated sales of 5.7 billion shillings in 2018, its first full year of operation, a drop of nearly 45 % compared to the figure of 10.3 billion shillen published in March. below the annual operating cost of 12 billion shillings.

The office did not reveal the reasons for the downward revision, questioning the accuracy of the mega project's performance reports.

The shortfall comes as concern grows about Kenya's ability to repay its Chinese loans.

Kenya is expected to make larger repayments by the end of the five-year grace period, set in May 2014.

Importers and exporters do not use the RMS for freight because of the "exorbitant rates" applied.

When the bureau announced a turnover of 10.3 billion shillings in March, the Chinese ambbadador to Kenya, Wu Peng, praised the SGR, built and operated by China Communications Construction Company, by undisclosed management fees.

"We believe that SGR is economically viable," said Wu. "Note that during the first year of operation, the Mombasa-Nairobi RRS has earned $ 103 million, which is close to operating costs. $ 118 million. It's never easy for a rail project to almost break even in one year. "

The shortfall resulted in increased transportation costs and a doubling of the price of children's tickets.

– Additional reports by the agencies