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East Africa splurges on infrastructure in budgets

Saturday June 23 2018
henry

Kenya’s Cabinet Secretary for National Treasury Henry Rotich on his way to read the budget on June 14, 2018. PHOTO | JEFF ANGOTE | NMG

By Allan Olingo

Regional economies have allocated a third of their individual budgets in the new financial year to infrastructure projects, aiming to boost economic activity and spur growth.

Of the $15.8 billion going to development projects, Kenya allocated $6.25 billion (39.5 per cent), followed by Tanzania at $5.3 billion, then Uganda at $3.05 billion and Rwanda at $1.28 billion.

Kenya reduced its allocation from $7.4 billion in the 2017/18 fiscal year. Tanzania’s allocation increased from $5.27 billion in the year ending June 30. Uganda had set aside $1.32 billion, while Rwanda had earmarked $924 million for development expenditure last year.

The projects range from airport upgrades to aircraft purchases, modernisation of road and railway networks, and energy generation.

Tanzania says it will prioritise the construction of its Central Railway Line under the standard gauge railway project, for which it has budgeted $3.14 billion, with about half of it paid to the contractor.

Kenya has allocated $747 million in the new financial year for the construction of Phase 2A of its SGR, from Nairobi to Naivasha in the Central Rift.

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Uganda is juggling between upgrading its metre gauge railway and initial work on its SGR, which is currently at the land compensation stage. Uganda Railways Corporation took over the operation of the metre gauge railway, after the termination of the Rift Valley Railways concession. Railway services on the Eastern Route resumed in February, and they reinstated the passenger rail service in the Kampala Metropolitan Area.

Ugandan Finance Minister Matia Kasaija reiterated the country’s commitment to developing the SGR.

“Eight per cent of the right of way for the SGR has been acquired, with 228 project affected persons in Tororo having been paid. In the new financial year, additional land on the eastern route will be procured. In addition, 42 railway wagons will be rehabilitated, bad spots along the Port Bell–Kampala and the Kampala-Malaba line will be repaired. Marking of the railway reserve boundaries will also be undertaken,” he said.

Airlines

Dar, Kampala and Kigali will also be working towards revamping their respective national carriers, Air Tanzania, Uganda Airlines and RwandAir respectively.

Tanzania has already spent $224 million on its first Boeing 787 Dreamliner expected to arrive in the country next month.

“Three aircraft, Boeing 787-8 Dreamliner with a capacity of 262 passengers and two Bombardier CS 300 aircraft with a capacity of 132 passengers each will be delivered later this year,” said Finance Minister Philip Mpango.

“In addition, we have completed procedures to procure a second new aircraft Boeing 787-8 Dreamliner and an initial down-payment has been made.”

“The revival of the national airline will enhance Uganda’s competitiveness by reducing the cost of air transport, and easing connectivity to and from Uganda. It will also support faster harnessing of opportunities in tourism, agriculture and minerals, oil and gas,” Mr Kasaija added.

Rwanda will be spending $300 million on three Boeings in the coming year, with a lease already signed for one of the aircraft through an undisclosed European carrier that has since folded.

Kenya, Uganda and Rwanda also allocated funds for the development of their airports.

Kampala said the redevelopment of Entebbe International Airport has progressed well, with the new cargo centre already 30 per cent complete, and 20 per cent works for the modification of the passenger terminal building done: 15 per cent of the rehabilitation works for expansion of Apron 1 is complete. Construction of the Hoima Airport commenced in January, and part of the funding will come from this year’s budget.

Kenya allocated $140 million for the expansion of Malindi, Isiolo and Lokichogio airports. Both the Isiolo and Lokichogio airports will become key when the country goes into full oil production.

Kigali is banking on its $418 million Bugeresa Airport, now under construction, to further open up the country and make it a central African regional hub.

Energy

On energy, Kenya, Uganda and Tanzania are pushing to have more of their citizens connected to the electricity grid, with the three countries allocating more than $2 billion for power initiatives. Kenya leads with an allocation of $1.4 billion for rural electrification, last mile connectivity and connection of public facilities.

“I have set aside $59 million for rural electrification and connection of public facilities; $67 million for Last Mile Connectivity; $100 million for the national street lightning programme; $55 million for Eastern Electricity Highway Project (Ethiopia-Kenya Interconnector); $10 million for substation installation, $10 million for installation of transformers in constituencies; $10 million for connectivity subsidy; $126 million for Loiyangalani–Suswa transmission line, land compensation and counterpart funding; and $31 million for Nairobi 220KV Ring,” Kenya’s Treasury Cabinet Secretary Henry Rotich said.

Tanzania will implement the third phase of its Rural Electrification programme to improve accessibility.

“We have recently embarked on the construction of a hydroelectric power project at Rufiji River, with the capacity to generate 2,100MW. This project is at the initial stages of implementation. We will also continue with the implementation of turnkey projects of supplying electricity under REA Phase III,” Dr Mpango said.

Kampala said that priority will be given to expansion of transmission and distribution networks to industrial zones and rural growth centres. There are also plans to replace parts of the dilapidated network, which accounts for about 30 per cent of power losses.

On roads, Kenya has allocated $1.15 billion for on-going road construction projects. Uganda says that $0.85 billion will go towards construction of 600km of new roads, upgrading to tarmac of 400km, rehabilitation of 200km of existing roads, and construction of 15 bridges.

“Contracting for the 600km of roads for the production of oil will be completed by the end of this month,” Mr Kasaija said.

Kenya allocated $127 million for the exploration of geothermal, wind and solar resources.

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