Uganda’s Finance Ministry releases UGX 305.2 Bn to commence works on the Standard Gauge Railway.

The construction of Uganda’s Standard Gauge Railway is set to kick-start following the Finance Ministry release of UGX 305.2b to the Works and Transport Ministry with a notice for the Turkish contractor, Yapi Merkezi, to begin work on the Standard Gauge Railway (SGR) immediately.

The finance ministry says more money will be released as the construction of the 273-kilometre section from Malaba, on the Kenyan border, to Kampala progresses.

The Ugandan SGR will eventually connect to the Kenyan one, whose extension from Naivasha is also starting.

According to the finance ministry’s Deputy Secretary to the Treasury, Mr. Patrick Ocailap, the contractor is expected to start work soon.

“We don’t want any delays now that we have released the money. This project is very important for the business community and economic development of the country,” he said.

During the regional cluster meeting of finance and private sector participation under the Northern Corridor Integration Projects at Serena Hotel, Kigo,  Patrick Ocailap, Uganda’s Deputy Secretary to the Treasury who represented the Finance Minister told the partner states that Uganda has registered progress on a number of directives under the Northern Corridor Integration Projects including signing of the construction agreement with the Turkish contractor and acquisition of the right of way for the Standard Gauge Railway (SGR) for the Eastern Route between Malaba and Kampala which now stands at 58% and signing of the civil works contract.

He recently said that “The construction of the SGR has taken time in negotiations and acquisitions of right of way, and financial closure. When Covid-19 struck the financial architecture went through the room. You could see crazy interest rates; rates of 10 percent on a dollar, from as low as zero. We had instances where banks were begging on taking money at 0.01 percent, but that was then.”

He, further, revealed that to-date government is still unsure why Exim Bank cold-shouldered the project that was once billed to unlock regional interconnectivity

“The piece of work they (yapi) did in Tanzania was quite impressive. So we think they are now better partners…up to 30 percent will be by our local contractors ... .and without steel and iron…you can see that kind of integration that will take place,” he said

For this project, Mr Ocailap has always remained guarded on the financing mechanisms of raising the money.

The Works and Transport Ministry permanent Secretary, Waiswa Bageya, said the contractor will start with preliminary activities such as geophysical surveys, soil testing, water surveys, and design drawing, amongst others.

Bageya said the SGR is a strategic project that will enhance investments and the flow of goods along the Kampala-Mombasa Port route.

The SGR will reduce the cost of transporting a 20-foot container from Mombasa Port to Kampala by half; from 3,200 dollars (UGX11.6 million) to 1,600 dollars (UGX5.8 million). This will lower the cost of doing business in Uganda.

The Uganda SGR is a railway system that will link Uganda with East African Community partners Kenya, Tanzania, Rwanda, Burundi, the Democratic Republic of Congo, and South Sudan.

The SGR project will be implemented in phases. After the Malaba-Kampala section, it will be extended to the borders of neighbouring countries, making a network of 1,724 kilometers.

This milestone comes as neighboring Kenya advances its own SGR extension, with plans to stretch the railway from Naivasha to Kisumu. Kenya Railways has successfully marked the alignment for Phase 2B of the project, covering approximately 262 kilometers across Narok, Bomet, Kericho, and Kisumu counties. Unlike the old railway route, the new alignment will follow a different path, with a resettlement study already commissioned to guide compensation for affected communities.