Uganda to secure Shs8 trillion loan for Malaba-Kampala SGR route
Standard Gauge Railway coordinator Kasingye Kyamugambi. FILE PHOTO
What you need to know:
Financier. EXIM Bank from China is expected to finance the Shs7.6 trillion project.
Kampala.
By October this year, Uganda will have closed the financing agreement for the construction of the first phase - Malaba to Kampala - of the Standard Gauge Railway (SGR), an official has revealed.
Eng Kasingye Kyamugambi, the SGR project coordinator said the government has prioritised the 273Kms Malaba – Kampala route, which is expected to cost $2.3 billion (Shs7.6 trillion).
“By the end of the 2016/17 financial year, we expect to have started construction. The expectation is that we shall have financial closure with China’s EXIM Bank by the end of October 2016,” Mr Kyamugambi told reporters last week.
Financial closure is defined as the process of completing all project-related financial transactions, finalising and closing the project financial accounts, disposing of project assets and releasing the work site.
Financial closure with the EXIM Bank has taken a while as approvals were subject to certain conditions like ensuring that the land acquisition process was undertaken by the government of Uganda. The SGR project is an initiative under the Northern Corridor Infrastructure Projects (NCIP), with Kenya, Rwanda, South Sudan and Uganda agreeing to borrow money from the Chinese government for the construction. The Kenyan government has already completed at least 70 per cent of the work between Mombasa and Nairobi.
Mr Kyamugambi downplayed any suggestions that Kenya was planning an alternative route that stops in Kisumu instead of Malaba. He also denied Uganda was delaying the implementation of the project.
“What is key was that we had to agree on a route with the contractor. Of course, Kenya had started before we could agree on the route with the contractor. There was also need for us to harmonise standards for the project. We are not lagging behind. As Kenya starts the Nairobi – Malaba route, we shall also be starting on the Malaba-Kampala route,” he adds.
Land compensation
In the 2016/17 Budget speech, Finance minister Matia Kasaija allocated Shs118 billion for the continuation of the land acquisition process along the proposed route of the SGR. This is in addition to the Shs113 billion that the project has been spending on the same process. Expected compensation cost will be about Shs300 billion. Compensation has been taking place in Tororo, with Shs10 billion already paid out to affected persons.
Mr Kyamugambi revealed that so far, they have completed Resettlement Action Plans for at least 140kms of the 273kms route.
Local content
The government signed a contractor, China Habour Engineering Company, with a task to ensure there is at least 40 per cent local content in the project; suppliers of cement and steel should be local companies, and 90 per cent of the projected 16,000 jobs reserved for Ugandans.
