Cost comparison SGR Kenya vs SGR Tanzania

Geza Ulole

JF-Expert Member
Oct 31, 2009
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Tanzania secures $7.6 billion financing deal from Chinese lender to build new railway
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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.

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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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Sammuel999, according to the report u haven't secured funds for other phases n though SRG in Tanzania's length is 4 times Kenya's, it's cost is twice Kenya's! Bwahaha since two arms of rift valley dissect Tanzania implying Chinese have overcharged u people if a comparison is to be undertaken btn Kenya's SRG n that of Tanzania or Ethiopia! And yet speed limit caped at 80 km/hr in Kenya..
 
Sammuel999, according to the report u haven't secured funds for other phases n though SRG in Tanzania's length is 4 times Kenya's, it's cost is twice Kenya's! Bwahaha since two arms of rift valley dissect Tanzania implying Chinese have overcharged u people if a comparison is to be undertaken btn Kenya's SRG n that of Tanzania or Ethiopia! And yet speed limit caped at 80 km/hr in Kenya..

Ni hao wakenya wameongeza cha juu, ndio maana hata bajeti yao ni uozo maana hela nyingi huishia mifukoni mwa mbwa mwitu. Hawa jamaa ni majanga!
 
Sammuel999, according to the report u haven't secured funds for other phases n though SRG in Tanzania's length is 4 times Kenya's, it's cost is twice Kenya's! Bwahaha since two arms of rift valley dissect Tanzania implying Chinese have overcharged u people if a comparison is to be undertaken btn Kenya's SRG n that of Tanzania or Ethiopia! And yet speed limit caped at 80 km/hr in Kenya..
cost of Kenyan rail is high because unlike Tanzania and Ethiopia where land is under government, land is owned by individuals and must be compensated. A good example is lamu port where the feasibility study was done back in 2011 but took 4 years for compensation to be completely done.
 
Ni hao wakenya wameongeza cha juu, ndio maana hata bajeti yao ni uozo maana hela nyingi huishia mifukoni mwa mbwa mwitu. Hawa jamaa ni majanga!

Each country is corrupt, the only difference in the level of corruptness in it. Many African countries are suffering from THIS and comparing Kenyan problems with yours is just stupid. With the variety of minerals you guys have, you should not be just struggling to copy paste everything Kenya does, rather your leaders should solve your own problems first. free health, improved better services and good education etc. The rest of will fall into place.
 
Each country is corrupt, the only difference in the level of corruptness in it. Many African countries are suffering from THIS and comparing Kenyan problems with yours is just stupid. With the variety of minerals you guys have, you should not be just struggling to copy paste everything Kenya does, rather your leaders should solve your own problems first. free health, improved better services and good education etc. The rest of will fall into place.

Nimependa hapo mwanzo
 
“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.
What does that mean? What is the total distance if you include these branches?
 
i thnk its premature to compare kenya sgr na tz sgr, bado details nyingi hatuzifaham bado, but with time may be things will be a little clearer, anyway here is a little comparison between kenya sgr and ethiopia.
Railways have classes one two and three.Minimum curve radius - Ethiopia: 2000 m; Kenya 1200 m.

Maximum gradient - Ethiopia: 1.0%, Kenya: 1.2%

Passing loop length for single track sections - Ethiopia: 3 km; Kenya: 1.2 km

Maximum distance between passing loops - Ethiopia: 30 km; Kenya: 30 km
Axle load - Ethiopia: 25 tons; Kenya 25 tons
Rails - Ethiopia: 60 kg/m; Kenya 60 kg/m

Length - Ethiopia: 656 km; Kenya 485 km (not including dual track, loop sections, yard tracks, etc)

Dual Track - Ethiopia: 115 km ; Kenya 0 km

Total budget (including Stations, rolling stock,etc) - Ethiopia: $2.8 billion; Kenya: $3.804 billion

Cost per km - Ethiopia: $4.27 million; Kenya: $7.84 million

My one pence observation, land issues in kenya are a big problem in investment
 
Each country is corrupt, the only difference in the level of corruptness in it. Many African countries are suffering from THIS and comparing Kenyan problems with yours is just stupid. With the variety of minerals you guys have, you should not be just struggling to copy paste everything Kenya does, rather your leaders should solve your own problems first. free health, improved better services and good education etc. The rest of will fall into place.
Kenya has more minerals than Tanzania!

Helium discovery draws attention to EA minerals
graphic.jpg

Easr Africa's minerals have not been fully exploited due to high infrastructure needs and mining input requirements, the report says. PHOTO | TEA GRAPHIC

In Summary

  • Region said to have a multitude of minerals that have not been fully exploited.


The discovery of helium in Rukwa, south-western Tanzania, has shifted global attention to East Africa’s vast mineral resources.

“East Africa is one of the continent’s next mining frontiers, hosting a multitude of minerals and will offer significant volume growth to investors in the next decade,” Deutsche Bank said.

“Miners have cut capital expenditure drastically as commodity prices have tumbled since the 2008 peak. The world will need new mines by 2025, including around 500 kilotonnes of copper, or more, each year,” the German bank added.

In a report titled Africa: The Next Frontier, Deutsche Bank said that despite massive deposits, the minerals have not been fully exploited due to high infrastructure needs and mining input requirements.

The draft East Africa Mineral Inventory Findings report at the EAC Secretariat shows that mining contributes about 2.3 per cent of the region’s GDP.

“It has great potential for employment opportunities and spearheading forward and backward linkage of the region’s economy. EAC’s mineral exploration and development is backed by various instruments,’’ the report says.

READ: Tanzania may start Helium production in 2021

ALSO READ: Vast helium deposit found in Tanzania's Rift Valley

The instruments include a treaty establishing the EAC Protocol on Environment and Natural Resources Management, which covers exploitation of mineral resources, and the Industrialisation Policy on the use of natural resources.
According to the Ministry of Mining and the Inventory report, Kenya has gold, soda ash, feldspar, limestone, gypsum, gemstones, marble, granite, carbon dioxide and fluorspar.

The country also has Baringo ruby, diatomite, chromite, copper, vermiculite, iron ore, pozzolana, limestone, magnetite, manganese, barytes, graphite, titanium, silica sand, niobium and rare earth elements.

Tanzania has diamonds, gold, gemstones, nickel, cobalt, copper, soda ash, phosphates, mica, gypsum, limestone, graphite and quartz.

The country also has vermiculite, which has wide range of applications in ceramics, pottery, brick making, tile making and glass manufacture. Other minerals are coal, kaolin, corundum, niobium, uranium and titanium.

KPMG Africa Ltd said the mining sector contributed about 3.2 per cent to Tanzania’s GDP in 2012; the government aims to grow it to 10 per cent by 2025.

“In the government’s estimates, about 90 per cent of Tanzania’s minerals — including gold, diamonds and gemstones — are yet to be exploited. The country has been a producer of gold and diamonds,” said KPMG in its report titled Africa Mining Tomorrow - Outlook Towards 2020.

Tanzania is Africa’s fourth largest producer of gold, with Acacia Mining Plc, Shanta Gold Ltd and Petra Diamonds Ltd among the main mine operators.

Information from Uganda’s Ministry of Energy and Minerals Development shows that the country has gold, copper, cobalt, tin, iron ore, tungsten, beryllium, limestone, phosphates, salt, clays, feldspar, diatomite, silica sand with construction materials such as granites and gneisses.

Rwanda plans to increase revenues from mineral exports to $400 million by 2017. The country’s minerals include cassiterite (tin ore), coltan, wolfram (tungsten ore), gold, nickel with precious stones such as amphibilite and quartzite.

Mining State Minister Evode Imena said Rwanda earned about $226 million in 2013, $206 million in 2014, $150 million in 2015 from mineral exports; the decline has been due to a drop in commodity prices.

Burundi’s political instability has adversely affected the country’s economy, as well as disrupted the mining of gold, tin, tungsten and tantalum.

Helium discovery draws attention to EA minerals

MY TAKE
Unless u prove to me what written above by the East African is a lie, ur argument is invalid...
 
why do people forget one important issue that makes all the difference.

Ethiopias land was taken by the government
Tanzanias land all belongs to the govt, so in most parts, they will compenset those who are really affected so its cheaper

on the other hand, in kenya, its willing seller, willing buyer,a piece of land can go from 1 million to 60 million within 5 years if the place becomes lucrative.


a d the distance of the rail from msa to nairobi is not 400km, its 609km. plus the chinies will be buildind a 100million plus university collage of railway which its not building anywhere else in africa and in this region, it will be the center on exellence for the region that is wiryh more than the loan




one of the deals on the kenyas SGR----

Costing $US4 billion and providing 30,000 local jobs, the project would make Kenya, China's central technical training hub for railway experts in East and Central Africa.
Irungu Nyakera, Kenya's Permanent Secretary in the Ministry of Transport and Infrastructure, made the announcement last week. Before completing the project, the China Road and Bridge Corporation (CRBC) has granted another $US10 million for necessary upgrades to Kenya's Railway Training Institute (RTI).
The funds will be used to construct a tower, to-be-completed in a year, which will accommodate the hub. The institute will provide training for railway specialists from the countries, which cluster around the SGR including Kenya, Uganda, Tanzania, South Sudan, Rwanda and the Democratic Republic of the Congo (DRC).
Kenya's lecturers in this field will be training in China to fulfill their rail engineering degree programs. Ten RTI lecturers are already in China. Another 40 lecturers are expected to arrive in the next few months.
While experts from China would offer education for a whole new generation of Africa's railway engineers, Kenya and China have held talks over partnership exchanges between some of their respective universities.
Kenya becomes hub for China's Railway Tech-training in Africa - CCTV News - CCTV.com English


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So you can laugh now and claim we were ripped off, but 10years from now we will see who got a more expensive deal when Tz will still be hiring 'experts' while we will be using local experts to build other smaller railways in the cities
 
why do people forget one important issue that makes all the difference.

Ethiopias land was taken by the government
Tanzanias land all belongs to the govt, so in most parts, they will compenset those who are really affected so its cheaper

on the other hand, in kenya, its willing seller, willing buyer,a piece of land can go from 1 million to 60 million within 5 years if the place becomes lucrative.


a d the distance of the rail from msa to nairobi is not 400km, its 609km. plus the chinies will be buildind a 100million plus university collage of railway which its not building anywhere else in africa and in this region, it will be the center on exellence for the region that is wiryh more than the loan




one of the deals on the kenyas SGR----

Costing $US4 billion and providing 30,000 local jobs, the project would make Kenya, China's central technical training hub for railway experts in East and Central Africa.
Irungu Nyakera, Kenya's Permanent Secretary in the Ministry of Transport and Infrastructure, made the announcement last week. Before completing the project, the China Road and Bridge Corporation (CRBC) has granted another $US10 million for necessary upgrades to Kenya's Railway Training Institute (RTI).
The funds will be used to construct a tower, to-be-completed in a year, which will accommodate the hub. The institute will provide training for railway specialists from the countries, which cluster around the SGR including Kenya, Uganda, Tanzania, South Sudan, Rwanda and the Democratic Republic of the Congo (DRC).
Kenya's lecturers in this field will be training in China to fulfill their rail engineering degree programs. Ten RTI lecturers are already in China. Another 40 lecturers are expected to arrive in the next few months.
While experts from China would offer education for a whole new generation of Africa's railway engineers, Kenya and China have held talks over partnership exchanges between some of their respective universities.
Kenya becomes hub for China's Railway Tech-training in Africa - CCTV News - CCTV.com English


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So you can laugh now and claim we were ripped off, but 10years from now we will see who got a more expensive deal when Tz will still be hiring 'experts' while we will be using local experts to build other smaller railways in the cities
Tunakuja kusoma wote hapo na mwisho wa siku wote tutakua na wataalam usifikilie mtasoma nyinyi tuu
 
I really wonder why you cannot concentrate on your own thing. Kenya does not do things because of Tanzania. So what if you have secured a much bigger funding than Kenya? It is not free. You will have to repay back.
 
I really wonder why you cannot concentrate on your own thing. Kenya does not do things because of Tanzania. So what if you have secured a much bigger funding than Kenya? It is not free. You will have to repay back.
when u make a lot on noises on a project, it is our responsibility to do a comparison or due dilligence analysis on such related ventures!
 
MKENYA YULE MCOOL, land compensation is not part of the Chinese loan! Chinese didn't pay for compensation! The naked truth is u were overcharged since u either didn't have a good to negotiate or the negotitors were paid kickbacks!
In Kenya financing caters for everything even land compensation. RAP and PAP are always considerations in any project, be either road or rail unless explicitly stated. I think its important to drop your sycophancy and stop berating anything Kenya. You cannot be lambasting Kenya for taking too many loans with the Chinese on one thread and singing praises for getting bigger funding in another
 
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