The Malaba-Kampala section of the standard gauge railway will take a while longer to be completed after China’s Export Import Bank set new loan preconditions for Uganda.
A document prepared by officials from Uganda’s Ministry of Finance, Planning and Economic Development and seen by this paper shows that a key demand by the Chinese is that Uganda secure guarantees from Kenya that it is still interested in and will source financing for the Naivasha-Malaba section of the standard gauge railway (SGR).
It also wants guarantees on compensation for those people affected by the project and a new feasibility and bankability study showing that construction of the SGR makes business sense.
Kampala has now been forced to revise the completion date for the construction of the SGR from the Northern Corridor’s target of March 2018, to sometime around 2020, The EastAfrican has learnt.
While the Ugandan government attributes the potential delay to China’s desire to take on a bigger portion of the financing responsibility in the wake of the agreement that the lender will run operations for 10 years in order to recoup its investment, sources say Beijing is concerned about Uganda’s ability to meet its repayment obligations.
Minister of Works and Transport John Byabagambi confirmed in an interview in Kampala that there will be delays, setting the new expected date of completion of only the Malaba-Kampala section to 2020. The target set by the Presidents of Rwanda, Kenya and Uganda was for the first train to be flagged off from Mombasa to Kigali in March 2018.
Statements by officials in Kigali and Nairobi following the Heads of State summit held in Kampala last month, suggested that the Kenya, Uganda and Rwanda coalition, which was supposed to build the SGR was crumbling.
But different ministers including Rwanda’s Finance Minister Claver Gatete and Mr Byabagambi say the project will continue. Mr Byabagambi now says that the only challenge is Uganda will miss the 2018 deadline because the Ministry of Finance, Planning and Economic Development hasn’t yet raised money for compensation for those affected by the project.
Exim Bank wants Uganda to first compensate all those whose land is on the Malaba-Kampala SGR route before a financing agreement can be reached.
Mr Byabagambi said compensation was moving on smoothly noting that the only concerns will emerge as they move towards the more built-up areas.
The Ministry has so far paid out Ush20 billion ($5.8 million) to project affected persons. And the same amount is to be paid out this week, but that’s way below the required compensation amount of over Ush300 billion ($87.7 million) for the Malaba-Kampala section of the SGR.
Mr Byabagambi said that in the 2016/17 financial year, another Ush110 billion ($32.1 million) has been allocated for compensation. This means that the process of compensation could be completed in the 2017/18 financial year.
This newspaper understands that a new application providing answers to the questions was submitted to the Chinese this month.
On Kenya’s part, Transport Cabinet Secretary James Macharia reportedly said Nairobi could terminate the SGR at either Naivasha or Kisumu. The Chinese are financing the Kenya leg of the SGR as well and have already agreed to do so up to Naivasha.
Source: The East African
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