Dar, Uganda plan $2.7b new port-lake railway

Monday April 4 2011

The East African Railway Master Plan is a proposal for rejuvenating existing railways serving Tanzania, Kenya, Uganda and extending them initially to Rwanda and Burundi and eventually to Sudan, Ethiopia and beyond. Photo/FILE

The East African Railway Master Plan is a proposal for rejuvenating existing railways serving Tanzania, Kenya, Uganda and extending them initially to Rwanda and Burundi and eventually to Sudan, Ethiopia and beyond. Photo/FILE 


Tanzania and Uganda are planning a $2.7 billion joint venture to develop a new railway line and ports on Lake Victoria to cope with increased trade from the East African hinterland.

The new 800km long railway will link a proposed multibillion dollar deep water port at Mwambani Bay in Tanga, with Musoma on Lake Victoria, with onward connection to Kampala and Juba.

The existing Central Corridor in Tanzania runs from Tanga and ends in Arusha, nearly 400km away from Lake Victoria and a new extension will be needed to Musoma — about 400km west.

Officials said the project is estimated to cost at least $2.7 billion, out of which $1.9 billion is for the railway, $695.5 million for the Mwambani port and $72.6 million for the development of the Musoma dock.

Tanzania Transport Minister Omar Nundu said that the partnership plan includes rehabilitation and upgrading of the Port Bell pier and construction of a new Kampala inland port in Uganda.

Mr Nundu said that the plan will also see the Tanga and Musoma ports dedicated to handling cargo destined for Uganda and Southern Sudan.


Cost of transport

The cost of transporting goods in the region could reduce significantly in the next five years as Kenya too plans a new railway connecting the port of Mombasa to Kampala in Uganda.

For the joint venture, Tanzania and Uganda are seeking $250 million of fresh capital to upgrade a separate jointly-owned 100-year-old imperial gauge line built during the colonial era.

A 25-year concession deal signed in 2006 with the Rift Valley Railway (RVR) consortium has so far failed to revamp the ailing network.

The consortium is made up of South Africa’s Sheltam Trade close, Mirambo Holdings and Primefuels Ltd.

Other partners include Kenyan private equity firm TransCentury and two other investors — Kenya’s Centum Investment Ltd and Babcock & Brown of Australia.

Last week, TransCentury said it plans to inject $300 million into Rift Valley Railways.

The funds, to be disbursed in the next five years, will be spent on modernising the Kenya-Uganda railway in which the private equity firm holds a principle interest of 34 per cent.

“Transport infrastructure division is focused on the turnaround of Rift Valley Railways and recapitalisation of the railway line,” said TransCentury’s chief executive officer Gachao Kiuna.

While cargo volume at the port of Mombasa has grown to over 19 million tonnes as at the end of last year from seven million tonnes in the 1980s, volumes transported by RVR have declined from 4.8 million tonnes to 1.5 million tonnes in the same period.

The proposed new railways will be an important link between ports in Kenya and Tanzania and the neighbouring landlocked countries of Rwanda, Burundi and Uganda.

According to Mr Nundu, rehabilitation of wagon ferries and building of a new ship to service Lake Victoria are also among projects stipulated in the joint plan.

Tanzania and Uganda however are still working on the cost for the Lake Victoria marine services upgrading, Port Bell pier and the new Kampala port.

President Yoweri Museveni of Uganda said that the Musoma link was “the lifeline” of the Uganda of his dreams.

Museveni said that freight will be conveyed from Musoma dock by ferry to Port Bell pier — about 350km inside Uganda. A rail connection runs via Tororo to Gulu – nearly 600km on the Pakwach branch.

North of Gulu, a new line of roughly 250km will have to be constructed to Juba, and a further 550km to the Wau railhead in Southern Sudan.

The proposals arise from continuing difficulties with getting freight from the port of Mombasa to Uganda, and on to Southern Sudan.

The costs on the Kenyan route are prohibitive and there are serious delays. The port at Dar es Salaam has logistics problems too.

Figures show that the Dar es Salaam dock accounts for only one per cent of all trade from Uganda, with 99 per cent passing through the port of Mombasa.

However, the Ugandan business community are of the opinion that Dar and Kampala will have to make some concessions to promote the route.

“To start with, Dar es Salaam needs to talk with Kampala not to charge tax freight when we use the Central Corridor. This will be a good enticement,” says Busingye Rwabogo, the Mukwano Industries operations general manager.

With a rated capacity for 4.1 million tonnes of dry cargo, six million tonnes of bulk liquids, 3.1 million tonnes of general cargo and a million tonnes of containerised traffic, the port of Dar es Salaam port is severely stretched.

It handles about 95 per cent of Tanzania’s international trade in addition to serving neighbouring landlocked countries of Zambia, Malawi, Burundi, Rwanda, Uganda and the Democratic Republic of Congo.

Development at the port of Tanga, with a current annual handling capacity of 500,000 tonnes, will reduce the load on Dar meaningfully.