THE government of Kenya has secured a commitment from the Export-Import Bank of China (Exim Bank) to fund construction of the remaining sections of the Standard Gauge Railway (SGR) from Naivasha to Malaba on border with Uganda.

“The financing of the proposed project will be done under a government-to-government arrangement between the Republic of Kenya and the People’s Republic of China through the Exim Bank of China and syndicated loans from commercial banks,” says Mr Kipchumba Murkomen, cabinet secretary of roads and transport.

The government of Kenya will fund the project through its Railway Development Fund, according to Murkomen. The African Development Bank (ADB) is also expected to contribute while both Kenya and Uganda seek private finance for the project.

“We are in discussion with the private sector to see if we can structure an arrangement for them to take the large burden at very reasonable and concessional terms so that we can continue with the project,” Murkomen says.

The Kenyan government originally borrowed $US 5bn from Exim Bank to fund construction of the 472km Phase 1 of SGR from Mombasa to Nairobi, and the 120km Phase 2A from Nairobi to Naivasha. Both sections are now in use by both freight and passenger trains.

The remaining sections of the SGR in Kenya are Phase 2B from Naivasha to Kisumu (262.3km), and Phase 2C from Kisumu to Malaba (102km). The total cost of both phases is estimated at $US 5.3bn, and Kenya hopes to resume construction in July.

Repaying the Exim Bank loan has placed a strain on the Kenyan economy, but the return of Chinese finance has given fresh impetus to seeking other commercial lenders as Kenya and Uganda each try to raise around $US 6bn for SGR construction.

“Once we source funds jointly and also use the same contractors, work will move smoothly,” says Mr Fred Byamukama, Uganda’s state minister for transport.

Work to build the section of the SGR from Malaba to the Ugandan capital Kampala is expected to start in September.

From Uganda, further extensions of the SGR are intended to provide rail connections to the Democratic Republic of Congo (DRC), Rwanda and South Sudan. As well as Burundi, which is due to be served by an extension of Tanzania’s SGR network, these three countries have now joined the SGR Cluster Joint Ministerial Committee and are now seeking funding from development partners.

“We have obliged our respective ministers to take joint urgent measures to mobilise resources for the implementation of this regional shared infrastructure and report on progress by the end of 2024,” says the president of Kenya, Dr William Ruto.

There is pressure on Kenya and Uganda to extend their new railway to the Great Lakes region and the resource-rich DRC, as Tanzania makes progress with its own $US 7.6bn SGR project.

This will see 1600km of new railway built from Dar es Salaam to Mwanza on Lake Victoria and Kigoma on Lake Tanganyika. The 300km Dar es Salaam - Morogoro section is now 98% complete, with the 442km from Morogoro to Makutopora 96% complete.

Elsewhre, Makutopora - Tabora is 14% complete, Tabora - Isaka 5% and Isaka - Mwanza 54% complete. The entire Tanzanian SGR project is expected to be completed by 2025.

The June issue of IRJ will contain an in-depth feature on the SGR and other rail projects in Tanzania.

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