$2.2 billion SGR Contract: Uganda Sacks China, Eyes Turkey’s Yapi Merkezi

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The Ugandan government is looking to signing up a Turkish company to build its 273 kilometre standard gauge rail line from Malaba to its capital Kampala. This followed cancellation of its $2.2 billion SGR contract with Chinese firm, CHEC, after the company  failed to execute the project in eight years, according to local media reports.

Prime Business Africa reports that the Standard Gauge Railway line  project was launched in 2016 in Kampala by Kenya’s President Uhuru Kenyetta, Rwanda’s Paul Kagame, Salva Kiir and host President Museveni.

The SGR line was supposed to start in Kenya, through Uganda to Rwanda and South Sudan but was hit by delays. It was originally projected to link up with Kenya’s own standard gauge rail, which runs to Mombasa’s Indian Ocean seaport.

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According to Reuters, the Ugandan government, in December, wrote to the China Habour Engineering Company seeking to cancel the 8-year old $2.2  billion deal. CHEC has not raised any objection to the letter.

Reuters quoted an unnamed government official, who was not authorised to speak on the matter,  as saying that “One of the obligations under the contract with the Chinese was that they were supposed to help Uganda source financing which has really not come true.”

Frustrated with Chinese unwillingness to provide the necessary funding for the project, Uganda now courts Turkey’s Yapi Merkezi to take up the deal, Reuters quoted a senior official in Uganda’s Works and Transport Ministry.

Quoting high level government source however, Uganda’s local newspaper – The Independent – reported that that CHEC had received the request but was yet to respond.

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There are indications that a positive response from CHEC would see a team of Ugandan engineers fly to Turkey for due diligence on Turkey’s Yapi Merkezi.

Wang Wenbin, the spokesperson for the Chinese Foreign Ministry, however, told a news conference that China and Uganda had in the past cooperated effectively on railway projects, hydropower stations, highways, oil and gas development and infrastructure construction.

“China and Uganda are comprehensive cooperative partners and practical cooperation between the two countries is at the forefront of China-Africa cooperation,” Wenbin said.

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Uduegbunam Chukwujama
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