Reports Leo Odera Omolo
-The $3b investment will help open up regional markets
-It covers 725 kilometres
A German-based firm, Thysssen Krupp, is to head a multi-billion railway project that will link Gulu in northern Uganda with Juba, the capital of Southern Sudan, highlighting increasing investment appetite in the Great Lakes region.
The huge infrastructure investment, estimated to be between $2b and $3b, will cover laying the rail network, covering about 725 kilometres, helping open up regional markets for more cost-competitive import and export of commodities.The government owned NEWVISION online reported this morning.
“Constructing improved haulage links promotes economic upswing and lower prices for consumer goods and additional jobs are created,” Stefan Ettwig, the firm’s spokesman, said.
“Railways are needed for transporting the (region’s) abundant mineral resources.”
The announcement comes at a time when the Great Lakes region comprising 11 countries including Uganda, Kenya, Tanzania Rwanda, Burundi, Southern Sudan, and DR Congo are facing high transport costs due to an inefficient rail network.
Studies show that transport between Uganda and Kenya alone costs more than $0.13 per tonne/kilometre due to heavy reliance on trucking. This has skyrocketed the cost of doing business in the region.
ThyssenKrupp, the world steel maker, is involved via its Gleistechnik subsidiary, along with the US firm, Ayr Logistics, and the Russian engineering firm Mos Metrostroy.
An option for an extension of the line to Wau in southern Sudan and links to Kenyan and Ethiopian networks is under consideration.
The existing Uganda-Kenya railway network was sold to a consortium known as Rift Valley Railway, which has been embroiled in power struggle, which has stalled the desired rehabilitation and improvement of the railway system.
The shareholding is composed of Citadel Capital, Trans Century, Mirambo Holdings, Prime Fuels, Austrialia’s Babcock and Brown, plus a Ugandan investor.
Businesses are frustrated that while rail transport is cheaper than road, most cargo is being hauled on road, denying them the edge in a regional market that is becoming increasingly competitive.
The long chain of transportation makes Uganda vulnerable to any problems arising along the way, and immediately results into delays in supplies delivery, causing shortages and artificial price hikes
The Uganda-Sudan railway idea was conceived in 2004 after a feasibility study.
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