Jingjun Li, CEO of CHEC, and Waiswa Bageya, Permanent Secretary of the ministry of Works and Transport, signing the deal in 2019

Uganda cancels Chinese railway deal, looks for Turkish alternative

Jingjun Li, CEO of CHEC, and Waiswa Bageya, Permanent Secretary of the ministry of Works and Transport, signing the deal in 2019Image: SG Railway Uganda

Uganda has cancelled a 2,2 billion dollar deal with the Chinese company China Harbour and Engineering Company Ltd (CHEC) to build a railway line from the Ugandan capital Kampala to the border with Kenya. Uganda is now considering a Turkish company to build the railway.

CHEC was supposed to help Uganda in financing the 273-kilometre railway, but is failing to do so. Perez Wamburu, project coordinator of the Standard Gauge Railway (SGR), said that Uganda hasn’t heard anything from CHEC for two years and that Uganda didn’t receive any funding for the project.

The SGR could become an important asset for Uganda since it will connect the landlocked country with the Indian Ocean. It’s aimed to link up with the Kenyan standard gauge railway, which runs all the way to the port city of Mombasa. Kenya has built 730 kilometres of railroad, financed with Chinese loans. However, the railway running to the Ugandan border hasn’t been built yet.

Cautious China

“We read between the lines when China’s Ambassador to Uganda said that after the Covid-19 pandemic, China has become more cautious about financing big infrastructure projects in Africa. We all know that Covid didn’t leave economies of the world the same,” Wamburu told the newspaper The East African.

Uganda has had a strong standing relationship with China. The country has, in the past, partnered with China on railways, hydropower stations, highways, and oil and gas projects. The Chinese foreign ministry spokesperson, Wang Wenbin, stated during a press conference in Beijing, “China and Uganda are comprehensive cooperative partners, and practical cooperation between the two countries is at the forefront of China-Africa cooperation.”

Tanzanian alternative

With China out of the picture, Uganda is looking at the Turkish company Yapi Merkezi to take over the project. Yapi Merkezi is working on several infrastructure projects in Africa, including the construction of a railway in neighbouring Tanzania. “So now the discussions are with Yapi Merkezi which has shown interest. There’s no contract with them yet, but there’s an MoU and things are moving fast”, an anonymous source at the Ugandan ministry of Transport told Reuters.

If Uganda is to sign a deal with Yapi Merkezi, the East African country could consider an alternative route to the coastline. In Tanzania, the Turkish company is helping to build a 1,219-kilometre standard gauge railway line to Dar es Salaam, which is also a port city. A direct railway connection between Uganda and Tanzania could in that case be a viable option.

The Turkish firm confirmed it had entered into a memorandum of understanding with the Ugandan government but that a final agreement has not been signed yet.

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Author: Roel van der Maas

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