SGR, ATCL claim bulk of Sh2.75 trillion transport budget

During a presentation of the ministry of Transport budget for the 2025/26 financial year in parliament yesterday, minister for Transport, Prof Makame Mbarawa, announced that Sh2.62 trillion will be allocated to development projects, while Sh125.4 billion will go toward recurrent expenses.

Also read: Six projects to gobble up huge chunk of Transport budget

This Sh2.75 trillion budget represents a 0.61 percent increase from the current year’s Sh2.73 trillion.

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SGR remains central to development

The centerpiece of the 2025/26 development agenda is the Standard Gauge Railway, which has been allocated Sh1.51 trillion from domestic sources, making it the largest item in the ministry’s budget.

These funds will facilitate the completion and continuation of construction across several sections of the Central Corridor. Key segments include Morogoro–Makutupora, Makutupora–Tabora, Tabora–Isaka, Isaka–Mwanza, Tabora–Kigoma, as well as the cross-border Uvinza–Musongati line into Burundi.

Additional funds have been set aside for the purchase of locomotives and wagons, training operational staff, and maintaining completed sections.

Prof Mbarawa emphasised that this investment will enhance logistics efficiency, reduce freight costs from the Port of Dar es Salaam to inland regions and neighboring countries, and stimulate economic activity.

According to projections from the Tanzania Railways Corporation (TRC), the railway is expected to generate Sh243.28 billion in revenue in 2025/26 by transporting 467,200 tonnes of cargo on the older meter gauge, 500,000 tonnes on the SGR, and carrying over 6.6 million passengers across long-distance and urban routes.

Also read: Tanzania Railway Corporation incurred Sh224 billion loss in one year, CAG report reveals

However, the Controller and Auditor General (CAG) recently raised concerns about underperformance. In his March 2025 report, CAG Charles Kichere noted that the TRC incurred a loss of Sh224 billion in the 2023/2024 financial year, compared to Sh102 billion the previous year.

 The CAG also highlighted that TRC achieved only 28 percent of its projected passenger traffic in Dar es Salaam over the last five years, pointing to inefficiencies that continue to undermine this ambitious project.

ATCL Receives Additional Investments Amid Audit Concerns

Air Tanzania Company Limited (ATCL) is also set to benefit from a substantial budget allocation. The government has earmarked Sh216.05 billion for aircraft procurement and an additional Sh67 billion for operational improvements.

These funds will support the acquisition of four short-haul passenger aircraft and one 23-tonne cargo plane, as well as the purchase of spare engines, refurbishment of headquarters, and establishment of new offices in Dodoma.

The plans also include the construction of a modern hangar, installation of ICT systems, and the training of pilots and engineers.

Also read: Air Tanzania’s annual losses surge 67% to Sh91.8 billion, CAG's new report shows

Kilimanjaro International Airport is being positioned as a secondary hub, with 38 staff houses undergoing renovation to reduce accommodation costs for crews. 

Despite these investments, the CAG’s report raised concerns. Four Airbus aircraft were grounded for up to 721 days by June 2024 due to poor after-sales support and maintenance planning.

 ATCL incurred Sh9.16 billion in fixed costs related to the grounded aircraft but recovered only Sh5.49 billion — just 60 percent — through government leasing incentives. The CAG noted that these aircraft were acquired without adequate feasibility studies, and the airline failed to enforce warranties on engine repairs.

Although the overall budget has increased by just Sh16.8 billion from the 2024/25 fiscal year, Prof Mbarawa defended this approach, stating that it prioritises continuity and consolidates gains. 

“The transport sector is a cornerstone of national development, enabling trade, industrialization, and regional integration,” he said.

The transport sector continues to be a significant foreign exchange earner. According to data from the Bank of Tanzania, the sector generated $2.48 billion between July 2024 and March 2025, an 8.3 percent rise from $2.29 billion during the same period the previous year. Revenues were primarily driven by levies, VAT, fuel taxes, and employment within the sector.

TPA’s ambitious revenue targets

The Tanzania Ports Authority (TPA) reported robust growth, handling 23.18 million tonnes of cargo between July 2024 and March 2025, an 11.87 percent increase from 20.72 million tonnes the previous year.

Container throughput also rose by 3.3 percent to 831,866 TEUs. For the 2025/26 fiscal year, the government has set an ambitious revenue target of Sh1.38 trillion for TPA, alongside plans to handle 6,366 vessels and 32.7 million tonnes of cargo. This includes 1,382 international ships with a combined gross tonnage of 42.1 million.

Revival of Bagamoyo Port

Among the most anticipated announcements is the decision to begin construction of the Bagamoyo Port, designed to accommodate post -Panamax vessels that cannot dock in Dar es Salaam, the mega port will link to the 100-kilometre Kwala Dry Port via modern rail, forming a strategic hub within the Bagamoyo Special Economic Zone.