Uganda Terminates SGR Contract with China, Signs MoU with Turkish Firm

After eight years of inactivity, the Ugandan government has terminated its contract with China Harbour Engineering Company (CHEC) for the construction of the first phase of the country's standard gauge railway (SGR). The 273km line, extending from Malaba to Kampala, was initially estimated to cost $2.2 billion. However, Chinese financiers withheld funding due to concerns about the viability of the project, as Kenya's SGR had not yet reached the border to connect with Uganda's.

The SGR Project Coordinator, Eng Perez Wamburu, announced that Kampala has signed a memorandum of understanding (MoU) with Turkish firm Yapi Merkezi. The company is expected to submit a construction proposal within the next few weeks, initiating the procurement process. Kampala plans to adopt a different financing model for the project, with Yapi Merkezi leveraging its network to secure funding from Export Credit Agencies (ECAs).

The EastAfrican has obtained proposals indicating potential financiers, including the UK Export Fund (UKEF), which expressed interest in providing £1.5 billion or $1.72 billion for the SGR project last September. President Yoweri Museveni, frustrated by the lack of progress with China Exim Bank, instructed officials to explore alternative financing options, with London and UKEF being the initial targets in September 2022.