Uganda walks away from $2.2b China railway deal

A deal between Uganda and China worth $2.2 billion for the building of a rail line from Kampala to neighbouring…

A deal between Uganda and China worth $2.2 billion for the building of a rail line from Kampala to neighbouring Kenya is being cancelled by the government in Kampala, citing lack of commitment from the Chinese company which was supposed to finance the project, APA has learnt.Uganda had reached a deal with the China Harbour and Engineering Company Ltd (CHEC) to build the 273-km railway line from the Ugandan capital to the Kenyan border with Kenya. 

However Uganda says it is now mulling offers from Turkish firm Yapi Merkezi to carry out the project after CHEC failed to meet its funding commitments.

 According to Perez Wamburu, the project coordinator of the Standard Gauge Railway (SGR), said for two years Uganda had waited for the CHEC to honour its commitments to no avail.

Landlocked Uganda is keen to benefit from Kenya’s SGR which could link it to the Kenyan port of Mombasa.

The 730 kilometre SGR from Nairobi to Mombasa was funded using Chinese loans and following its completion Uganda had been keen for a railway linking up with it at the border with Kenya.

Meanwhile, Wamburu said the dawn of the coronavirus pandemic had prompted countries like China to review its financial involvements in Africa, citing a statement from the Chinese ambassador to Uganda as suggesting that Beijing would have to be more cautious in its approach to funding projects in Africa.

The East African quoted Wamburu as saying “We read between the lines when the Chinese Ambassador said China has become more cautious about financing big infrastructure projects in Africa. We all know that Covid didn’t leave economies of the world the same”.

In recent years Chinese loans had been used to build hydropower plants and roads in Uganda. 

Turkish company Yapi Merkezi is no stranger to Africa, with its construction works for a railway taking place in Tanzania where a 1,219-kilometre standard gauge railway line to Dar es Salaam is being laid. 

A memorandum of understanding has been signed between Uganda and the Turkish outfit but no concrete agreement has been reached.

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