Uganda revives colonial-era railway after Chinese funds fall through

8th July 2023 – RFI with Reuters (https://www.rfi.fr/en/africa/20230807-uganda-east-africa-railway) [5]

Uganda has begun restoring a disused branch of a railway line built under the British Empire, which it hopes will offer a cheaper way to transport goods to neighbouring countries. … Work has begun to restore nearly 400 kilometres of the tracks between Tororo in eastern Uganda, near the border with Kenya, and Gulu in the north, near South Sudan.

“Our ambition is to move all long-distance bulk cargo transportation onto rail from roads in a few years because rail is cheaper in terms of cost and time,” a spokesperson for for state-run Uganda Railways Corporation, John Linnon Sengendo, told Reuters news agency.

Uganda decided to revamp the old network after plans to build a separate, modern line failed to secure funding from China.

The government cancelled its contract with a Chinese firm earlier this year and is now seeking a new contractor for the project, which would see the construction of a standard gauge railway linking the Ugandan capital Kampala to the Kenyan border, where it would join up with Kenya’s modern lines.

Another Chinese contractor, China Road and Bridge Corporation, will repair the old line over two years at a cost of 200 billion shillings (50.6 million euros) to the Ugandan government, Sengendo said.

Uganda’s railway network fell into disrepair during the country’s economic collapse in 1970s and early ’80s.

Ugandan officials hope once the link is restored, rail will replace trucks in shipping transit goods to South Sudan and north-eastern Democratic Republic of Congo.

Under its East African Railway Master Plan, the East African Community regional bloc is aiming to revive lines serving Tanzania, Kenya, Uganda and extend them to Rwanda and Burundi. Ultimately it hopes to add South Sudan and Ethiopia to the network too.

Ugandan old railway line rehabilitation on track

14th January 2024 – The EastAfrican (https://www.theeastafrican.co.ke/) [1]

Article by Kabona Esiara

Uganda’s planned overhaul of the metre gauge railway to cut transport costs on the Northern Corridor and improve trade competitiveness has entered its final stages, even as the country faces a shortage of equipment, wagons, and trains.

The EastAfrican has learnt [that] Spanish firm Imathia Construction has completed replacing steel sleepers with concrete beams on the Namanve-Kampala section of the line, which is expected to be handed over this month, Uganda Railways Corporation (URC) publicist John Lenon Sengendo said, adding that the contractor will then embark on the final section, Namanve-Mukono.

This will be the second section of the track to be completed after rehabilitation of the Tororo-Namanve line, including the line to Jinja Pier, which was completed a year ago.
While the Malaba-Namanve metre gauge track is now in fair condition, importers, exporters, and shippers remain sceptical about switching to rail, citing a shortage of rolling stock and inefficiency, which has resulted in 90 percent of traffic on the Northern Corridor being carried by road and only about seven percent is carried by rail because of the poor state of rail infrastructure.

As a result, transport costs are comparatively high on the Northern Corridor, ranging from 20 cents to 25 cents per tonne per kilometre for road transport, while the cost for rail transport ranges from US cents 6 to US cent 12 per tonne per kilometre, depending on the type of cargo.

The shortage of rolling stock is partly blamed on URC. A June 2022 Uganda’s Auditor General after reviewing URC’s asset register, had 521 wagons located in different parts of Kenya.

But only 128 wagons exist, leaving a balance of 393 wagons unaccounted for, raising fears of a possibility of URC overstating its asset values in the financial statements.

[A] URC accounting officer explained that “there were many wagons left in Kenya by RVR (U) Ltd upon concession termination. A repatriation exercise to return these assets to Uganda commenced in July 2021 and by December 2021, a total of 243 wagons had been brought back.”

Under this project, Uganda is to buy 3,000 horsepower locomotives by 2026.
The number of Uganda government-owned wagon ferries is also expected to increase from the current two to four, a development set to help URC meet the growing traffic demand on Lake Victoria.

The other financiers are the African Development Bank, which will provide $233.2 million, and the African Development Fund to provide $100.7 million – both concessional loans to finance the construction and purchase of rolling stock, which includes locomotives, wagons and coaches.

URC’s target is to move cargo from road to rail, and we expect to be moving six million tonnes a year.

In its efforts to revamp the metre gauge railway, Uganda is also reviving the route from Tororo in Eastern Uganda to Gulu City in the north. The line is currently under construction. Significantly, the city also hosts the Gulu Logistics Hub, whose phase one is also under construction. … The hub – which will be rail-linked – was planned as a strategic location connecting to the growing markets of Congo and South Sudan.

Kenyan government to spend $731m on new trains, SGR revamp

11th May 2023 – The EastAfrican (https://www.theeastafrican.co.ke/) [2]

Article by Business Daily

The government of Kenya has stepped up expenditure on the Nairobi-Mombasa standard gauge railway (SGR) with a plan to hit Ksh100 billion ($731.53 million) in the next three years to revamp the line, build new sidings and buy more locomotives and cargo wagons.

A report by Kenya’s National Treasury shows that the country’s Transport ministry will receive an additional Ksh97.7 billion ($714.7 million) for the “Development of Standard Gauge Railway” between July this year and June 2026.

This reverses a trend where the previous government had cut allocations to the SGR and will push the spending related to this line beyond KSh780 billion ($5.7 billion) by June 2026.

Beginning July, the Kenyan government has allocated Ksh37.4 billion ($275.79 million) from the Railway Development Levy Fund (RDLF) for the Nairobi-Mombasa SGR.

The bulk of the allocation, according to the breakdown shared with the Business Daily from transport, has been earmarked for the acquisition of additional locomotives and freight wagons at a cost of Ksh11.9 billion ($87.1 million).

Kenya last bought its 1,620 locomotives and wagons from China in 2018.

State had no plans for extension – The allocations to transport ministry show that the government had no plans to extend the SGR beyond Naivasha to Kisumu and finally Malaba in the next three years.

The rest of the funds, which have been allocated under the “Mombasa to Nairobi SGR” vote will largely be used to build new feeder lines and rehabilitate the old metre gauge railway (MGR) lines.

Charged at the rate of two percent, the Railway Development Fund (RDF) is levied on all goods imported into the country for home use.

“The purpose of the levy shall be to provide funds for the construction of a standard gauge railway network in order to facilitate the transportation of goods,” reads part of the Miscellaneous Fees and Levies Act which establishes the kitty.

Budgetary allocations for the acquisition of locomotives and wagons are projected to increase to Ksh16 billion ($117 million) in Financial Year 2024/25 and Ksh22.2 billion ($162.4 million) in the Financial Year 2025/26 taking the total allocations for the three years to Ksh50.1 billion ($366.5 million).

Another Ksh5.9 billion ($43.16 million) will be spent on the rehabilitation, remanufacturing or overhaul of locomotives, wagons and coaches, according to a breakdown of the Ksh37.4 billion ($273.6 million) allocation.

The new feeder lines will link some of the sections of the modern railway such as the Mombasa SGR Terminus to critical urban centres.

This includes Ksh4.48 billion ($32.77 million) for the construction of the Riruta-Lenana-Ngong Railway Line and Ksh2.96 billion ($21.65 million) for the construction of a Railway Metro Line linking Embakasi Station and Ruai town.

In the next 12 months, the government will also build a new 2.8-kilometre Metre Gauge Railway (MGR) link from Mombasa SGR Terminus to Mombasa MGR station at a cost of Ksh2.5 billion ($18.29 million).

These funds will also be used to construct a railway bridge across the Makupa causeway that links Mombasa Island to the Kenyan mainland.

New MGR line – A new Metre Gauge Railway (MGR) line linking the Naivasha Inland Container Depot to the existing Longonot Railway Station has been allocated Ksh1.6 billion ($11.7 million) in the next financial calendar.

The construction of a Railway Metro Line connecting Athi River Station to the East African Portland Cement has been allocated Ksh400 million ($2.93 million).

This is projected to rise to Ksh1.17 billion ($8.56 million) in the Financial Year starting July next year and Sh1.36 billion in Financial Year 2025/26.

Another Railway Metro Line connecting Athi River Station to NSSF and Mavoko will absorb Ksh450 million ($3.3 million), a figure that is set to increase to Ksh1.56 billion ($11.4 million) and Ksh1.89 billion ($13.83 million) in 2024/25 and 2025/26.

The money will also be used to rehabilitate the line between Longonot and the Western border town of Malaba, which is aimed at facilitating the movement of cargo from the port city of Mombasa to Uganda.

Also in this border town, which is prone to congestion, the State plans to build Malaba Cargo Handling Yard. Around Ksh474 million ($3.45 million) has been set aside for this project.

Other spending items will be the acquisition of plant and equipment, which shall take up Ksh3.8 billion ($27.8 million) in the next fiscal year, Sh1.1 billion in Financial Year 2024/25 and Ksh600 million ($4.4 million) in the Financial Year 2025/26.

Logistics Hub – A logistics hub is planned for Athi River with the state putting aside Ksh1.125 billion ($8.23 million).

The allocation for this planned logistics hub will reduce to Ksh375 million ($2.74 million) in the year ending June 2025.

Initial plans were to extend the SGR to Uganda; however, this has since stalled with the Treasury not getting funds for the extension to Kisumu and finally to Malaba.

Murkomen at the beginning of this year said the Kenya Kwanza administration in partnership with the Chinese government is keen on extending the SGR from Naivasha’s Mai Mahiu to the border of Uganda through a five-year plan that will see the multibillion-dollar railway line run through Narok, Bomet, Nyamira, Kisumu, and Malaba.

“In the long run, we would like to complete the connection of the SGR from Suswa to Kisumu through Bomet, Nyamira, parts of Kisii and later to Malaba. Later, we can think of upgrading the existing MGR via Nakuru to Kisumu and via Eldoret to Malaba,” he said on December 15, 2022.

With the additional expenditure, the government hopes the country’s most expensive piece of infrastructure will help to grow the economy and improve the standard of living for Kenyans.

The administration of former President Uhuru Kenyatta borrowed Ksh656.1 billion ($4.8 billion) in three tranches for the construction of the two phases of the SGR, contributing to a major build-up of Kenya’s stock of debt.

Kenya will use Ksh11.9 billion ($87 million) to acquire rolling stock that will be used to ferry cargo on the SGR from Mombasa to Naivasha.

Grand $15 billion plan to expand Kenya SGR to Kisumu, Malaba, Isiolo

15th May 2023 – The EastAfrican (https://www.theeastafrican.co.ke/) [3]

Article by Business Daily

Kenya has set sights on a Ksh2.1 trillion ($15.3 billion) plan to extend the standard gauge railway (SGR) to Kisumu, Malaba and Isiolo by the end of June 2027, a government document seen by the Business Daily shows.

According to the plan, the State Department of Transport will build another 2,746 kilometres of the SGR at $15.3 billion, a move that will push the total spend on the modern railway to more than Ksh2.75 trillion ($20 billion).

The plan, lifted from the Jubilee Government’s grand scheme on SGR (so far Kenya’s most expensive project), is part of the Ksh3.42 trillion ($24.9 billion) Lamu Port South Sudan-Ethiopia Transport (Lapsset).

Lapsset is aimed at opening up northern Kenya and revamping the northern corridor by spurring movement within Kenya, South Sudan and Ethiopia.

It is an ambitious scheme that will not only see the modern railway reach the border town of Malaba via Kisumu, as it was initially envisioned, but also Isiolo, Moyale and the island of Lamu.

The line will move from Mariakani in Mombasa County to Lamu to Isiolo. From Isiolo, the SGR will be connected to the northeastern town of Moyale which borders Ethiopia.

From Isiolo, the government will extend the SGR to Nairobi, connecting the country’s capital city and commercial hub to northern Kenya and finally to Ethiopia.

From Naivasha, the SGR is extended to Malaba through Kisumu.

The bulk of the financing for these additional kilometres of the SGR, around Ksh1.8 trillion ($13 billion), will be from external financiers that the document has not revealed while the rest will come from the Kenyan government.

So far, the SGR from Mombasa to Naivasha has been financed by the Chinese at a total cost of Ksh656.1 billion ($4.7 billion)

The longest stretch of the planned SGR, 753.2 kilometres, will be from Isiolo to Nakodok, a small town near the border between Kenya and South Sudan.

The Transport Ministry, headed by Kipchumba Murkomen, has cost this phase of the SGR at Ksh443.2 billion ($3.2 billion).

From Lamu to Isiolo, a distance of 544.4 kilometres, the Ruto administration plans to build the rail line at Ksh348.7 billion ($2.5 billion).

From Isiolo to Moyale, a distance of 475.9 kilometres, the country is expected to use Ksh317.8 billion ($2.3 billion) to build a new SGR line.

The line connecting Mariakani to Lamu of 325.3 kilometres will cost Ksh257.3 billion ($1.8 billion).

There will be another line of 278 kilometres connecting Nairobi to Isiolo that will consume Ksh239.2 billion ($1.7 billion).

Phase 2B of the SGR from Naivasha to the lakeside city of Kisumu will cost Sh380 billion while the last leg, 2C, from Kisumu to Malaba bordering Uganda will take another Ksh122.9 billion ($896 million).

The document from the State Department of Transport reveals what appears like a near-impossible feat of the government wanting to complete the entire transport circuit in four years from 2023 to 2027.

Although the ministry’s document indicates that construction of these railway lines is to begin at the start of July this year, no budgetary allocation has been made for the SGR for the next three financial years.

In 2014, the government entered into a tripartite agreement with the governments of Rwanda and Uganda to construct a standard gauge railway from Mombasa through Kampala to Kigali, Rwanda.

However, the SGR ended abruptly in Naivasha with China reportedly declining to finance the last leg of the modern railway after failing to strike an agreement with Uganda.

The new administration of President Ruto has rekindled plans to complete the SGR.

Through a partnership with the Chinese government, Mr Murkomen said earlier this year the government wanted to extend the SGR from Naivasha’s Mai Mahiu to the border of Uganda through a five-year plan that will see the multibillion-dollar railway line run through Narok, Bomet, Nyamira, Kisumu, and finally Malaba.

“In the long run, we would like to complete the connection of the SGR from Suswa to Kisumu through Bomet, Nyamira, parts of Kisii and later to Malaba. Later, we can think of upgrading the existing MGR via Nakuru to Kisumu and via Eldoret to Malaba,” the CS said in a statement on December 15 last year.

The Transport Ministry has been allocated Ksh100 billion ($729 million) from the Railway Development Levy Fund (RDLF) for the next three years to revamp the existing SGR line from Mombasa to Naivasha via Nairobi and build new sidings.

The money will also be used to buy more locomotives and cargo wagons, which are aimed at improving the freight capacity of the modern railway which is still facing cut-throat competition from trucks.

Plans to revamp the SGR involve mostly building new metre gauge railway (MGR) or rehabilitating them.

New Concrete Sleepers for the Metre-Gauge in Uganda

New Vision reported that, on 1st September 2023, President Yoweri Museveni opened a new Concrete sleeper making facility at Kawolo, Buikwe District, Kampala. The sleepers are to be used in the rehabilitation of the metre-gauge railway line.

The traditional steel sleepers are no longer in favour. Thefts and vandalism mean that alternatives have had to be sought. [6]

The sleepers are being used on the Kampala to Namanve line before being rolled out to other projects. The construction of the factory valued at over 19 million Euros (about 76 billion Uganda Shillings) started in June 2020.

The use of concrete sleepers on the suburban lines will be supplemented by the procurement of diesel multiple units and additional coaches.

“In August 2020, URC said the Government had secured funding from the Spanish government and African Development Bank (AfDB) to the tune of shillings 1.3 trillion to revamp the Metre Gauge Railway by rehabilitating about 250 kilometres from Malaba to Kampala.” [6]

Kenya Railways puts proposed Lapsset SGR costs at $16 billion: bulk on Isiolo-Nakodok line

Monday 22nd January 2024 – The EastAfrican

(https://www.theeastafrican.co.ke/) [4]

Kenya will need at least Ksh 2.4 trillion ($16 billion) to construct a proposed Standard Gauge Railway (SGR) on the Lamu Port-South Sudan-Ethiopia-Transport (Lapsset) corridor, according to projections by the Kenya Railways Corporation.

According to the parastatal, it would cost Ksh 523.05 billion ($3.49 billion) to build a 544.4 km SGR link to connect Lamu and Isiolo and a further Ksh 476.7 billion ($3.178 billion) to extend the line from Isiolo to Moyale over a distance of 475.9 km.

The largest spending would be on constructing the SGR line from Isiolo to Nakodok town on the border between Kenya and South Sudan over a distance of 753.2 km at a cost of Ksh664.65 billion ($4.431 billion).

Kenya Railways has estimated that a further Ksh 358.8 billion ($2.392 billion) will be required to link Isiolo and Nairobi via SGR over a distance of 278.6 km and a further Ksh 385.95 billion ($2.573 billion) for the 325.35 km stretch between Lamu and Mariakani.

The entire stretch will cover a total of 2,377.45 km, translating into a cost of Ksh 1 billion ($6.667 million) for every kilometre of the SGR.

But the cost of undertaking such a colossal venture, which would be by far the most expensive in Kenya’s history, will be far higher than Kenya Railways’ estimates considering the company did the costing at an exchange of Ksh150/US dollar.

The parastatal has nonetheless expressed confidence in raising Ksh275.9 billion ($1.84 billion) or 11.4 percent of the total project cost by the financial year 2027/28 through funding from the government, collections from the Railway Development Levy Fund (RDLF) and loans.

Kenya in 2014 began construction of Phase 1 of the SGR line between Mombasa and Nairobi covering 472km. Phase 2A Nairobi-Naivasha (120km) was constructed in 2017. The project was funded by a $5.08 billion loan from China.

“The SGR line has led to expansion of the Inland Container Depot (ICD) in Nairobi at Embakasi, and construction of the ICD – Naivasha at Mai Mahiu,” said Kenya Railways.

The firm added: “This has contributed to decongestion of the seaport of Mombasa and facilitated seamless transit of goods destined to Western Kenya and neighbouring countries.”

Already, two studies have been undertaken to explore the feasibility of a Lapsset corridor railway by Japan Port Consultants in 2009 and China Civil Engineering Construction Company (2015). The latter study estimated the cost of the project at $10.4 billion with a financial rate of return of between nine percent and 12 percent.

The proposal to build an SGR line along the Lapsset corridor is however not feasible yet as the Lapsset project has failed to take off due to lack of funding as well as insecurity. Kenya is also facing a huge debt pile which has been worsened by the rapid depreciation of the Kenyan shilling leading to a surge in foreign currency external loans.

References

1. https://www.theeastafrican.co.ke/tea/business/ugandan-old-railway-line-rehabilitation-on-track-4490790, accessed on 15th January 2024.
2. https://www.theeastafrican.co.ke/tea/business/kenyan-government-to-spend-731m-on-new-trains-4230714, accessed on 15th January 2023.
3. https://www.theeastafrican.co.ke/tea/business/usd15bn-plan-to-expand-kenya-sgr-to-kisumu-malaba-isiolo-4235152, accessed on 15th January 2024.
4. https://www.theeastafrican.co.ke/tea/business/kenya-puts-proposed-lapsset-sgr-cost-at-16b-4498058, accessed on 23rd January 2024
5. https://www.rfi.fr/en/africa/20230807-uganda-east-africa-railway, accessed on 28th January 2024.
6. https://newvisionapp.page.link/AnZKJYD8UVVMesj46, accessed on 10th February 2024
7. https://metrospy.net/tag/president-museveni-commissions-ugandas-first-railway-concrete-sleeper-factory, accessed on 10th February 2024.
8. https://twitter.com/IMATHIA_/status/1732763129472250220?t=gIdF9LI4kbCV89rYCs0MGg&s=19, accessed on 10th February 2024.
9. https://youtu.be/Hf1Rr-2FPuU?si=NTFqVs7UgqeoASR3, accessed on 10th February 2024.