African Business: Railway confusion in East Africa as Dar es Salaam-Kigali rail lines secure funding

According to information received from Dar es Salaam has the Tanzanian government signed a comprehensive financing deal with China’s EXIM Bank, securing the necessary funds to commence construction of this new Central Corridor mega rail project. Once complete will the new Standard Gauge (SGR) line link the port of Dar es Salaam with Kigali, though there are also plans afoot to connect Eastern Congo to the rail line and maybe even Burundi, though that country is currently in a political and economic freefall, unable to look beyond today.

The new rail line will broadly follow the present narrow gauge line, also connecting from Tabora to Isaka, the designated link station from where the line then continues into Rwanda to connect the capital Kigali.

Additional domestic rail lines from Tabora are reportedly also planned, to the Lake Victoria port of Mwanza but also to Kigoma on Lake Tanganyika.

The signing of the finance deal concludes one of the key prerequisites for the construction of the new rail line and going by the Kenyan experience, where the new Mombasa to Nairobi SGR line is ahead of schedule, the same is now expected for Tanzania, once construction proper goes underway.

Promoters of the Northern Corridor rail link between Mombasa, via Nairobi and the Ugandan border to Kampala and on to Kigali, are now said to be scratching their heads though, trying to figure out what Kigali’s position will be vis a vis their proposed link via Mirama Hills to Kampala. When the rail line to Dar is completed, so conventional wisdom would dictate, will a second line via Kampala and Nairobi to Mombasa still viable, i.e. will there be enough rail cargo for imports and exports to eventually pay back the credits or will one of the two lines end up to be a white elephant.

Given that Uganda herself has more recently handed a major pipeline deal to Tanzania, financed by Total of France, despite having previously agreed with Kenya to route this pipeline from the Ugandan oil fields to the port of Lamu, are such doubts justified.

Said a source close to the present railway operation by RVR, short for Rift Valley Railways: ‘It is now conceivable that the new SGR line from Dar es Salaam could be extended to Uganda in two ways. One is by rail ferry via Mwanza and the other would be to extend the line from Rwanda to Uganda. After all, Uganda already has an existing and now very reliable rail link from Mombasa to Kampala. Cargo transit time has reduced to just about two days after several key sections of the line were rehabilitated. This line also links to Gulu and is a springboard to South Sudan. Tracks exist, though disused, to even Pakwach and Kasese, both close to the border with Congo. The Kenyans are openly thinking about only running their SGR as far as Kisumu or maybe even only to Naivasha, going by media reports on this subject. So should this be the case, Uganda would have to finance the access section to the border too and that could be a game changer.

You have always speculated how many such rail lines Eastern Africa can finance and viably operate. Well, it is time people begin to look for answers because the Tanzania deal could be a real game changer for the NCIP countries’.

Interesting times now lay ahead when it comes to the railway projects of Eastern African, as the third major such project, linking the port of Lamu under the LAPSSET concept with South Sudan and Ethiopia, is also still on the drawing board but the required financial investments are said to be so massive, that given the fast rising debt burden of East African countries, even Chinese financial institutions may eventually shy away from projects seen as perhaps too risky.


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