A construction worker at the Trial section of the Standard Gauge Railway
(SGR) at Mtito Wa Ndei, Kenya. The cost of the 521km Isaka-Kigali
section is estimated at $2.5 million. FILE PHOTO | NATION
Tanzania could turn to World Bank to finance the construction of its electric standard gauge railway (SGR).
Finance
and Planning Minister Dr Philip Mpango on Monday said that the World
Bank had expressed its intention to help fund the Isaka-Rusumo SGR
section and Rwanda’s section from Rusumo border to Kigali, along with
other transport infrastructure projects.
This would be
an about-turn from President Magufuli’s earlier stance that Tanzania
would finance its multibillion-dollar railway, aircraft modernisation
and energy projects.
“We have the funds for the
construction of the standard gauge railway until its completion from Dar
to Isaka. We also have the resources internally to fund the
construction of the Stiegler Gorge hydroelectricity project,” President
Magufuli said in March.
About two years ago, President
Magufuli asked for money to finance infrastructure project from the
World Bank Group president Dr Jim Yong Kim, who was on a visit to Dar.
Budget allocation
And now, Dar has announced setting aside over $610 million in
the 2018/19 budget for the construction of the 300km SGR between Dar and
Morogoro; and the 336km Morogoro-Makutopora line.
This is significantly higher than the $392.23 million set aside in the current financial year.
Transport
and works Minister Makame Mbarawa told parliament that an additional
$435,821 had been set aside for a feasibility study into the proposed
371-kilometre SGR project linking Isaka and Rusumo in Rwanda.
Dr
Mpango’s meeting with World Bank officials in Washington D.C. now sets
in motion the discussions between Dar and Kigali over the railway
project as the two countries look for a workable financing mix to
actualise it.
The World Bank has in the last year
increased its funding for Tanzania’s infrastructure projects, providing a
$340 million loan last year to help Dar upgrade its port
infrastructure.
Last year, the bank announced that Dar
would be able to access up to $2.4 billion in concessional financing
over the next three years, an increase of $500 million over previous
allocation.
Out of this, $780 million would go into
financing the Ubungo Interchange in Dar, while $225 million would fund
the Second Water Sector Support Project, and a further $130 million
provided as an additional financing for the Tanzania Strategic Cities
Project leaving a further $1.13 billion for Dar to draw down for its
other infrastructure projects.
Open tendering process
Last
month, Dar and Kigali broke ranks with their regional neighbours,
opting for an open tendering process for the SGR project as opposed to
the Kenya and Uganda SGR project tendering system, which have been
government to government agreements-driven tendering processes that
emulates the build, finance and operate model.
It will,
however, be interesting to see the financial financing model for the
project given that the two countries have in the recent past preferred a
different mix of models to fund their infrastructure projects.
“We
have different financing models to choose from and I believe we will
consider one that’s better for our people. At the moment, we can’t give a
clear indication on what model we prefer as we have not reached that
stage yet,” Mr Mbarawa added.
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