Magufuli to launch Sh15tr standard gauge rail project

Dar es Salaam. The official launch of a $7.6 billion (Sh15 trillion) standard gauge railway line will now take place in the next six weeks, BusinessWeek has learnt.

Retired President Jakaya Kikwete was initially scheduled to officiate at the launch on September 15, 2015, but the event had to be rescheduled due to busy schedules of top government officials. Mr Kikwete stepped down on November 5 and was succeeded by Dr John Magufuli.

According to a report released by the Reli Assets Holding Company (Rahco) last week, the standard gauge railway to link Dar es Salaam and neighbouring Burundi, Rwanda and DR Congo has been delayed and will now be launched by Dr Magufuli.

Under the original plan announced by former minister for Transport, Samwel Sitta, Mr Kikwete was scheduled to launch such a giant project on September 15, but he failed to do so due to busy elections period, according to Rahco Managing Director, Benhard Tito.

“The project is still intact. It is set to be launched before the end of this year. Communications among senior government officers of Tanzania, DR Congo, Rwanda and Burundi are going on for the successful launching of this important project,” says Mr Tito.

Moreover, Rahco Public Relations Officer Catherine Moshi, says that the timeline for launching the standard gauge railway will remain intact as last week senior government officers of Burundi, Rwanda and DR Congo had accompanied the Permanent Secretary in the Ministry of Transport, Dr Shaaban Mwinjaka, to the site for launching the standard gauge railway.

The site for launching the standard gauge railway project, according to her, is Mpiji-Soga area at the border between Kisarawe and Kibaha districts. “The project is supposed to begin this year. Preparations are still going on. The site for the launching ceremony has already been prepared and built,” says the Rahco public relations officer.

Ms Moshi further says Rahco is the main supervisor of the project, which is part of the Central Transport Corridor intended to promote interregional trade in the East African Community.

The standard gauge railway line will be constructed from Dar es Salaam to Isaka in northern Tanzania and Kigali in Rwanda with a link to Burundi running from Keza to Musongati through Gitega, according to her. “Another line will be constructed from Mpanda to Lake Tanganyika to link our country with eastern part of DR Congo,” she says.

In May this year, former transport minister Mr Samwel Sitta issued a statement to the Parliament, declaring that the Chinese consortium led by China Railway Materials was awarded a $7.6 billion contract to build a 2,561 km standard gauge railway from Dar es Salaam to Burundi, Rwanda and DR Congo.

According to him, the consortium will finance 10 per cent of the total costs, while financial adviser Rothschild is finalising procedures for sourcing the remaining funds through commercial banks.

The Trade Mark East Africa which supervises the major EAC infrastructure projects says in its April, 2015 report that, the standard gauge railway is part and parcel of unlocking huge economic potentials of the EAC countries which are now enjoying huge discoveries of oil and gas.

According to Trade Mark East Africa improvement of transport infrastructure in the Central Transport Corridor and the Northern Transport Corridor running from Mombasa in Kenya to Kigali, Rwanda is crucial for unlocking economic potentials of the landlocked countries. “The EAC member states-Tanzania, Kenya, Uganda, Rwanda and Burundi, whose combined gross domestic product (GDP) is $110.3 billion (about 204 trillion), are working to package joint infrastructure plans aimed at boosting trade and speeding up economic integration in the region,” reads part of Trade Mark East Africa statement.

With the construction of the standard gauge railway, Tanzania expects to increase further the amount of transit cargo handled at her biggest Dar es Salaam Port.

When delivering his last speech to the Parliament meeting in Dodoma in July this year, retired President Kikwete said that the amount of transit cargo handled by the Dar es Salaam Port from the landlocked countries is expected to increase by 25 per cent this year.

The government is optimistic that the project will take off due to the fact that the transaction adviser, Rothschild, has international banking experience of interacting with global network of commercial banks.