President John Magufuli with China Exim Bank president Liu Liang after
holding talks at Chamwino State Lodge in Dodoma this week. PHOTO
| COURTESY
By ALLAN OLINGO
In Summary
- Dar es Salaam is positioning itself as a regional hub, upgrading its port to attract more business from its neighbouring landlocked countries.
- The EAC railways master plan incorporates the standard gauge railway’s Northern and Central Corridors, which are both commercially viable for landlocked countries in the region as they give them strategic access to the ports of Mombasa and Dar es Salaam.
- The Northern Corridor Integration Projects championed by Rwanda, Kenya and Uganda spearheaded the establishment of a railway link from Mombasa to Kigali.
- In June 2013, a Northern Corridor Integration Projects Heads of State Summit held in Kampala put in place mechanisms for fast-tracking the development of the SGR.
Tanzania has secured a $7.6 billion loan from China’s
Export-Import Bank (Exim) for the construction of a railway line that
will link it with Burundi, Rwanda and Democratic Republic of Congo.
President John Magufuli secured the concessional loan after meeting with the Exim Bank’s president Liu Liang.
President Magufuli, while announcing the funding, alluded to a preferential deal without providing details.
Oil and gas discoveries have turned Tanzania into an exploration
hotspot, but the country’s transport infrastructure has suffered from
decades of under investment. The country is also positioning itself as a
regional hub, upgrading its port to attract more business from its
regional landlocked neighbours.
According to Mr Liu, China Exim Bank will offer Tanzania technical support.
Last year, Tanzania announced that it had awarded rail contracts
to a consortium of Chinese firms led by China Railway Materials (CRM),
which included the standard gauge rail project.
The Exim Bank is also financing a $1.2 billion, 532km natural gas pipeline in Tanzania.
On Wednesday last week, Finance and Planning Minister Dr Philip
Mpango after a meeting with Dr Alberic Kacou, African Development Bank
vice-president for human resources and corporate services, announced
that Tanzania had secured a further $200 million loan from the AfDB to
finance transport infrastructure projects.
“We will use some of this funds towards the construction of the
SGR project to transform the country’s infrastructure,” Dr Mpango said.
In an interview with Bloomberg, Gerson Msigwa, a spokesman for
Tanzania’s presidency, said the construction will start by July next
year. Before then, Tanzania and Exim Bank China will be expected to have
finalise technical issues on the contract and sign the financing deal
for the 2,190km project.
Tanzania Transport Minister Samuel Sitta said the SGR will have a
main line that will connect the port city of Dar es Salaam to Rwanda
and Burundi, with additional branch lines running within the country.
“We expect to have two offshoots: One of them to Mwanza, which
will open up the lakeside port city and link it with Uganda, while the
second one will link to the coal, iron ore and soda ash mining areas in
the south. Through this, we expect an increase in cargo on this route,”
Mr Sitta said, adding that will be at an additional cost of $6.6
billion.
Already, Tanzania has signed contracts with China Railway No 2
Engineering Group to build a rail link between the southern port of
Mtwara, which is rich in coal, iron ore and natural gas. The contract
will see China Railway No 2 Engineering Group provide 10 per cent of the
funding with the rest provided by the government.
Kenya is also constructing a $3.27 billion 609km new standard
gauge railway line between Mombasa and Nairobi to boost the movement of
cargo from the port.
However, queries have been raised over the economic viability of
SGR, after key landlocked states indicated their intention to connect
to the Indian Ocean through Tanzania.
The issue of cost is also bound to arise now that Tanzania’s SGR
is four times longer than Kenya’s but only two times as expensive.
In a previous interview with The EastAfrican, Kenya
Railways managing director Atanas Maina said that the cost of the Kenyan
SGR was high because of the design adopted, which will see the train
maintain an average speed of 80 kilometres irrespective of the terrain.
“We have built bridges, and raised the track in areas where we
would have had corners to achieve the average speed we expect the wagons
to travel at. This has increased the costs immensely as compared with
the neighbouring Ethiopia and Tanzania SGER designs that haven’t taken
this into account,” Mr Maina said.
Recently, a confidential World Bank report cast doubt on the
region’s push for the SGR projects, saying they would only be viable
with increases in cargo of between 20 tonnes and 55 million tonnes per
year.
The report done by the Africa transport unit at the World Bank
titled The Economics of Rail Gauge in the East Africa Community showed
that the volumes of the forecasts undertaken for the EAC railway master
plan and central line in Tanzania, are unattainable over the medium to
longer term.
“Based on these assumptions, there is no economic or financial
case for standard gauge in the EAC area at this time. A refurbished
meter gauge network would appear to be the most appropriate option in
economic and financial terms, and could easily accommodate forecast
traffic up to 2030, with lower investment requirements,” the report
concludes.
The World Bank team highlighted the rehabilitation of the
existing railway network as the best alternative, which would allow a
phased approach to the regions development, consistent with current and
projected demand and the financing envelope available.
The SGR alternative, which the regional governments chose,
involves the construction of a standard gauge railway on a new right of
way, an option the World Bank team said required additional investment
in land acquisition and structures, and new right-of-way construction.
“This alternative predicates axle loads in the order of 25 tons
per axles and a maximum operating speed of up to 120 km per hour. Again,
based on these assumptions, the estimated maximum carrying capacity of
the current network would exceed 60 million tonnes per year. The
estimated investment cost per km will be $ 3.25 million,” the report
said.
From the estimates provided, the Tanzanian new railway line will cost an average of $3.4 million per kilometre.
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