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Malaba-Kampala SGR to Cost UGX 10.98 Trillion

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At the signing of the construction agreement with Turkish company Yapi Merkezi, SGR project coordinator Canon Perez Wamburu disclosed that the deal was concluded at €2.7 billion, down from the initial company proposal of €3.4 billion.
15 Oct 2024 07:00

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Uganda is set to invest 10.98 trillion shillings in the construction of the first phase of the Standard Gauge Railway (SGR). The 273-kilometer line will run from Malaba to Kampala, passing through 12 districts: Butaleja, Buikwe, Iganga, Jinja, Luuka, Mayuge, Mukono, Namutumba, Wakiso, and Kampala.

At the signing of the construction agreement with Turkish company Yapi Merkezi, SGR project coordinator Canon Perez Wamburu disclosed that the deal was concluded at €2.7 billion, down from the initial company proposal of €3.4 billion.

“The original quotation that Yapi gave us, in response to our request, was €3.4 billion, and through negotiations, it was brought down to a total of €2.7 billion,” said Wamburu.

According to Wamburu, €2.3 billion will be allocated for civil works, with the remainder covering other project costs. He added that the project will be fully funded by the government of Uganda through a loan from a consortium of financiers, led by the Ministry of Finance.

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The negotiated amount is lower than the initial proposal of over Shillings 2.83 trillion but remains higher than the Shillings 9.31 trillion proposed by the China Harbour Engineering Company (CHEC), with whom the government previously failed to reach an agreement.

Minister of Works and Transport Katumba Wamala stated that the agreement follows an Engineering, Procurement, and Construction/Turnkey (EPC/T) model, under which the contractor is responsible for delivering a fully functional railway ready for use at the end of the contract period.

Katumba further mentioned that construction is expected to last 48 months, commencing after the project is commissioned early next month. However, actual work will begin once the initial financing agreements are finalized, with Citibank as the lead project financier.

“The SGR will become the backbone of our surface transport system and provide the much-needed transport capacity in the country and the region, as cargo and passenger transport demand has been increasing rapidly over the last decade,” said Katumba. He added that the SGR would enhance regional integration, lower transport costs, and make the region more competitive for investment.

As part of the Northern Corridor Integration Projects, the SGR is designed to improve interconnectivity within East Africa, boosting trade, mobility, and communication. Uganda plans to construct up to 1,700 kilometers of railway, extending to the borders of Rwanda, DR Congo, and South Sudan. 

Despite its neighbors making strides on similar projects, Uganda's progress has been limited until this agreement, marking a significant step toward realizing the country's ambitious plans. Erdem Arioglu, Vice Chairman of Yapi Merkezi, highlighted the company’s experience, drawing examples from the recently completed Dar es Salaam-Dodoma SGR.

“Yapi Merkezi is a sixty-year-old company with fifty years of experience in such projects, whether sections or turnkey. We have completed many projects worldwide and are among the best in the EPC/T sector. For your information, in Tanzania, we are executing 1,000 kilometers of alignment, of which we have already completed 750 kilometers successfully,” said Arioglu.

He added that the Tanzanian line had transported up to 550,000 people over the past two months.

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