Cost comparison SGR Kenya vs SGR Tanzania


Geza Ulole

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Tanzania secures $7.6 billion financing deal from Chinese lender to build new railway

President John Magufuli with China Exim Bank president Liu Liang after holding talks at Chamwino State Lodge in Dodoma this week. PHOTO | COURTESY

In Summary

  • Dar es Salaam is positioning itself as a regional hub, upgrading its port to attract more business from its neighbouring landlocked countries.
  • The EAC railways master plan incorporates the standard gauge railway’s Northern and Central Corridors, which are both commercially viable for landlocked countries in the region as they give them strategic access to the ports of Mombasa and Dar es Salaam.
  • The Northern Corridor Integration Projects championed by Rwanda, Kenya and Uganda spearheaded the establishment of a railway link from Mombasa to Kigali.
  • In June 2013, a Northern Corridor Integration Projects Heads of State Summit held in Kampala put in place mechanisms for fast-tracking the development of the SGR.

Tanzania has secured a $7.6 billion loan from China’s Export-Import Bank (Exim) for the construction of a railway line that will link it with Burundi, Rwanda and Democratic Republic of Congo.

President John Magufuli secured the concessional loan after meeting with the Exim Bank’s president Liu Liang.

President Magufuli, while announcing the funding, alluded to a preferential deal without providing details.

Oil and gas discoveries have turned Tanzania into an exploration hotspot, but the country’s transport infrastructure has suffered from decades of under investment. The country is also positioning itself as a regional hub, upgrading its port to attract more business from its regional landlocked neighbours.

According to Mr Liu, China Exim Bank will offer Tanzania technical support.

READ: China Exim sets terms for financing Uganda’s SGR

ALSO READ: Rwanda looks to Tanzania for rail transport as Uganda falters on SGR

Last year, Tanzania announced that it had awarded rail contracts to a consortium of Chinese firms led by China Railway Materials (CRM), which included the standard gauge rail project.

The Exim Bank is also financing a $1.2 billion, 532km natural gas pipeline in Tanzania.

On Wednesday last week, Finance and Planning Minister Dr Philip Mpango after a meeting with Dr Alberic Kacou, African Development Bank vice-president for human resources and corporate services, announced that Tanzania had secured a further $200 million loan from the AfDB to finance transport infrastructure projects.

“We will use some of this funds towards the construction of the SGR project to transform the country’s infrastructure,” Dr Mpango said.

In an interview with Bloomberg, Gerson Msigwa, a spokesman for Tanzania’s presidency, said the construction will start by July next year. Before then, Tanzania and Exim Bank China will be expected to have finalise technical issues on the contract and sign the financing deal for the 2,190km project.

Tanzania Transport Minister Samuel Sitta said the SGR will have a main line that will connect the port city of Dar es Salaam to Rwanda and Burundi, with additional branch lines running within the country.

“We expect to have two offshoots: One of them to Mwanza, which will open up the lakeside port city and link it with Uganda, while the second one will link to the coal, iron ore and soda ash mining areas in the south. Through this, we expect an increase in cargo on this route,” Mr Sitta said, adding that will be at an additional cost of $6.6 billion.

Already, Tanzania has signed contracts with China Railway No 2 Engineering Group to build a rail link between the southern port of Mtwara, which is rich in coal, iron ore and natural gas. The contract will see China Railway No 2 Engineering Group provide 10 per cent of the funding with the rest provided by the government.

Kenya is also constructing a $3.27 billion 609km new standard gauge railway line between Mombasa and Nairobi to boost the movement of cargo from the port.

However, queries have been raised over the economic viability of SGR, after key landlocked states indicated their intention to connect to the Indian Ocean through Tanzania.


The issue of cost is also bound to arise now that Tanzania’s SGR is four times longer than Kenya’s but only two times as expensive.

In a previous interview with The EastAfrican, Kenya Railways managing director Atanas Maina said that the cost of the Kenyan SGR was high because of the design adopted, which will see the train maintain an average speed of 80 kilometres irrespective of the terrain.

“We have built bridges, and raised the track in areas where we would have had corners to achieve the average speed we expect the wagons to travel at. This has increased the costs immensely as compared with the neighbouring Ethiopia and Tanzania SGER designs that haven’t taken this into account,” Mr Maina said.

Recently, a confidential World Bank report cast doubt on the region’s push for the SGR projects, saying they would only be viable with increases in cargo of between 20 tonnes and 55 million tonnes per year.

The report done by the Africa transport unit at the World Bank titled The Economics of Rail Gauge in the East Africa Community showed that the volumes of the forecasts undertaken for the EAC railway master plan and central line in Tanzania, are unattainable over the medium to longer term.

“Based on these assumptions, there is no economic or financial case for standard gauge in the EAC area at this time. A refurbished meter gauge network would appear to be the most appropriate option in economic and financial terms, and could easily accommodate forecast traffic up to 2030, with lower investment requirements,” the report concludes.

The World Bank team highlighted the rehabilitation of the existing railway network as the best alternative, which would allow a phased approach to the regions development, consistent with current and projected demand and the financing envelope available.

The SGR alternative, which the regional governments chose, involves the construction of a standard gauge railway on a new right of way, an option the World Bank team said required additional investment in land acquisition and structures, and new right-of-way construction.

“This alternative predicates axle loads in the order of 25 tons per axles and a maximum operating speed of up to 120 km per hour. Again, based on these assumptions, the estimated maximum carrying capacity of the current network would exceed 60 million tonnes per year. The estimated investment cost per km will be $ 3.25 million,” the report said.

From the estimates provided, the Tanzanian new railway line will cost an average of $3.4 million per kilometre.

MY TAKE

It is time now to look at the cost of the two rails as we know cost of construction is very important for prospect of any infrastructure! i welcome bright minds to contribute and not some propaganda in here!


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eti best in africa...wajinga sana hawa...wanatuletea maneno ya majukwani ya yule bichwa nundu wao...bwahaaaaa...BRT kule inapumulia mashine..mwendo wa hasara tu..ATCL ndio hyo,koroshow season haikuisha movie imeshindwa kujiuza,BRT nayo ni balaa...
 
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Okay, from the comments i notice tanzanians have some animosity towards Kenyans, if your hard on for kenya lasts more than five minutes, you need to see a doctor.First they rely on insults instead of concrete arguments, by the way the guy i quoted is an economist and i would rather take advice from an economist than reading propaganda articles from the tanzanian government. Also the constant comparison between kenya and tanzania is nonsensical. It is akin to comparing a rolls royce to a bullock cart. No one has even tried to dispute the facts stated in the article, what they have done is to insult every person who offers a counter argument without offering any fact that counters the article. Also comparing a project that is by all intents and purpose still a hypothetical with a working project is illogical in the least.
You my friend have just discovered the reason for these sections of Kenyan threads, Tz inferiority complex playing itself out, there is little logic, brain use, just hating on Kenya to hide what they already know. Kenya is better and they know it very well.
The reasons they know better, sijui ni wivu au denial that its not even a competition. Kenyans are looking ahead but they want our attention. SGR in Kenya is better in structure and economic potential. Mwishowe they will build an inferior SGR for almost the same cost as us to serve tiny economies equivalent to a county in Kenya. Kama SGR is making losses at 12 cargo trains a day(its making good profit currently) sasa ya TZ na treni 2 tuu at peak to Rwanda for almost $10b in loans italipa hizo deni aje? Profit itatoka wapi?
 
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You my friend have just discovered the reason for these sections of Kenyan threads, Tz inferiority complex playing itself out, there is little logic, brain use, just hating on Kenya to hide what they already know. Kenya is better and they know it very well.
The reasons they know better, sijui ni wivu au denial that its not even a competition. Kenyans are looking ahead but they want our attention. SGR in Kenya is better in structure and economic potential. Mwishowe they will build an inferior SGR for almost the same cost as us to serve tiny economies equivalent to a county in Kenya. Kama SGR is making losses at 12 cargo trains a day(its making good profit currently) sasa ya TZ na treni 2 tuu at peak to Rwanda for almost $10b in loans italipa hizo deni aje? Profit itatoka wapi?
Tena usisahau the biggest commercial city in Tz is Dar ambayo ndo inachukua karibu 40% ya imports kutoka nje kwahivyo reli haihitajiki kufikisha mizigo ya watu kutoka bandarini....
The only business ambayo watatengeneza ni ku export raw minerals in bulk.. na biashara ya Dodoma
 
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EXERCISE
explain hiyo ni type gani ya hiyo building....?
kiasi gani kimetumika kujenga hilo jengo...?
nipe tofauti kati ya wewe na hilo jengo..?
Je huwa limetumia material gani..?..
hilo jengo limekulipa kiasi gani cha pesa K.shs?
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Wewe ni ghaSEER tu. Tuonyeshe jengo kama hilo kutoka dandagiza land
 
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Lusematic

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Wewe ni ghaSEER tu. Tuonyeshe jengo kama hilo kutoka dandagiza land
hata nikikuonyesha hayawezi kufanana wait km za mradi zisogee kwa kukamilika nitakushow vile best n quality desgn inavyokuwa

kwa sasa kuwa mpole endeleeni kujenga magofu

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hata nikikuonyesha hayawezi kufanana wait km za mradi zisogee kwa kukamilika nitakushow vile best n quality desgn inavyokuwa
kwa sasa kuwa mpole endeleeni kujenga magofu
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Ni zile zinazofanana na vyoo vya umma unazungumzia? Pugu station and the other one? Public toilets in Nairobi are even beautiful.Acha nifungue Uzi .NAIROBI PUBLIC TOILETS VS TZ SGR STATIONS
 
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Lusematic

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Ni zile zinazofanana na vyoo vya umma unazungumzia? Pugu station and the other one? Public toilets in Nairobi are even beautiful.Acha nifungue Uzi .NAIROBI PUBLIC TOILETS VS TZ SGR STATIONS
ile ni normal station ,haipaswi kuwa station kubwa kwani kutoka katikati ya jiji ambako station kubwa inajengwa si mbali sana na pugu ni km kadhaa tu hivyo hata mngekuwa nyie msinge jenga station kubwa.....zitakazowatia adabu zipo njiani halafu punguza kula mirungi

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