Uganda Signs $3 Billion Deal with Turkish Firm to Build Key Railway Line

Uganda Signs  Billion Deal with Turkish Firm to Build Key Railway Line
Spread the love

Uganda’s government has entered into a significant partnership with Turkish construction firm Yapi Merkezi to build a 272-kilometre section of the Standard Gauge Railway (SGR) between Malaba and Kampala. The agreement, signed on October 14, 2024, is valued at approximately $3 billion (about Shs10.8 trillion) and marks a major step in Uganda’s efforts to improve its transport infrastructure and boost regional trade.

The deal was announced by Perez Wamburu, Uganda’s Standard Gauge Railway project coordinator, during a press briefing in Kampala. Wamburu explained that the new railway will be the first section of a larger 1,700-kilometre electric rail network that Uganda plans to build. Construction on the Malaba-Kampala section is expected to begin in about 42 days, with a projected timeline of four years for completion.

Speaking at the signing ceremony, Uganda’s Permanent Secretary for Works, Bageya Waiswa, emphasized the importance of the project for both Uganda and the wider East African region. Waiswa said that the railway will reduce transportation costs and enhance trade, providing landlocked Uganda with a more efficient connection to Kenya’s rail system and the Indian Ocean port of Mombasa.

The project will be financed through a combination of Ugandan government funds and loans from export credit agencies. This collaboration will not only aid in the construction of the rail line but will also ensure that Uganda has the financial backing to see the project through to completion. Waiswa said that the construction phase is set to last 48 months once it begins.

This new rail section is part of a larger vision that was first launched in 2013 by the leaders of Uganda, Kenya, Tanzania, South Sudan, and Rwanda. The aim was to create a modern rail network across East Africa, improving trade links between these countries, which have a combined population of more than 300 million people. While Kenya and Tanzania have made substantial progress on their segments of the SGR, Uganda has been slower to advance due to funding and partnership delays.

In 2015, Uganda signed a deal with China Harbour and Engineering Company Ltd (CHEC) to build the railway. However, the agreement was dependent on CHEC securing financing from the Chinese government, a condition that proved difficult to meet. After years of fruitless negotiations, Uganda terminated its agreement with CHEC in 2023 and began talks with Yapi Merkezi. The Turkish firm is already building a similar rail project in Tanzania, further boosting its credibility as a partner.

The SGR is expected to transform the transportation landscape in Uganda, making it cheaper and faster to move goods and passengers between Kampala and the Kenyan border. Once connected to Kenya’s existing SGR, it will provide Uganda with direct access to Mombasa, one of East Africa’s busiest seaports, further integrating the region’s economies.

The Standard Gauge Railway initiative has long been seen as a critical infrastructure project for East Africa.

Leave a Reply