Uganda cancels $2.3bn railway deal with China

Uganda was connected to Kenya by an obsolete metre-gauge railway (TTC dude/CC BY-SA 4.0)
Uganda has cancelled a deal with a Chinese contractor to build a $2.3bn railway after Beijing decided not to fund the scheme, Bloomberg reports.

Perez Wamburu, Uganda’s project coordinator, told Bloomberg yesterday that the contract was terminated after it became clear that “things weren’t working out”.

Uganda began negotiations with China’s Export–Import Bank in January 2017 for a $2.3bn loan to build a railway between Kampala and the town of Malaba on its border with Kenya.

China Harbour Engineering, a subsidiary of China Communications, had been chosen to build the 273km line, which would have become one section of a 1,700km railway stretching to the Indian Ocean port of Mombasa.

However, work on the Kenyan scheme has also run into funding problems, and China has been concerned that the Ugandan scheme would not be financially viable without the link-up.

Kenya has so far built 730km of track between Mombasa port city to Naivasha, around 200km from the border, but hasn’t determined when it might continue to Uganda.

According to Bloomberg, Uganda may consider an alternative route through its southern neighbour Tanzania, where Turkish contractor Yapi Merkezi is already building railroads. Commentators said they expected talks with the Turkish firm to begin shortly.

Ugandan president Yoweri Museveni said last month that this option may be chosen if his nation and Kenya fail to synchronise their construction time-lines.

Yapi Merkezi is presently building a standard gauge railway across Tanzania, from Dar es Salaam to Rwanda and Uganda. The first phase of this scheme was completed in April last year.

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