Tanzania, Burundi in Talks About SGR Link

SUNDAY MARCH 24 2024

An elevated section of the standard gauge railway (SGR) in Dar es Salaam, Tanzania. PHOTO | THE CITIZEN | NMG

By BOB KARASHANI

Tanzania and Burundi have begun formal talks on the technical aspects of building a standard railway gauge railway (SGR) link after securing funding from the African Development Bank (AfDB).

Tanzania’s Finance Minister Mwigulu Nchemba held back-to-back meetings with representatives from the AfDB and the Burundi government last week, the first high-level discussions since Tanzania signed a $91.76 million agreement with the pan-African lender on February 23 to fast-track the project, whose launch has been delayed for over two years due to lack of financing.

Dr Nchemba and Burundi’s Infrastructure minister Dieudonné Dukundane met in Dodoma on March 15 to compare notes from technical experts from both sides who have been thrashing out the procurement and other project nitty-gritty.

According to a Tanzania Railway Corporation public notice issued back in August 2022, the project will be supervised jointly with their Burundi counterparts, ARTF, but all related procurement will be handled by Tanzania.

The ministers said cooperation had been good, with Mr Dukundane highlighting how Burundi President Evariste Ndayishimiye was making the project a priority and had issued instructions for “close follow-ups on the entire implementation process from start to finish.”

The project is aimed at extending Tanzania’s SGR, which is at various stages of construction, to Burundi and later the DR Congo with $696.41 million financing package approved by the AfDB in December 2023.

The initial funds will cover construction of two phases (Lots 6 and 7) totalling 567 kilometres from Tabora to Kigoma in Tanzania (411km) and Uvinza to Malagarasi in Burundi (156km). A third lot from Malagarasi to Burundi’s Musongati nickel mines (84km) is awaiting funding.

The main contractor has also yet to be identified.

In a separate discussion with AfDB’s resident representative in Tanzania Patricia Laverley a day before he met with Mr Dukundane (March 14), Dr Nchemba made a strong pitch for the bank to amend its procurement laws so that more local suppliers and contractors can be involved in the project.

He said Tanzania’s objective in enacting a new procurement law in 2023 was to prioritise local involvement in externally funded infrastructure projects and in the process rope in more large taxpayers to help the government repay loans incurred as part of the funding support.

“It does not offer a good picture when national debt continues to grow while lenders pay so much more money to foreign companies that implement development projects than to local sub-contractors participating in the same projects, given that these sub-contractors are part of the debt repayment process through the taxes they pay,” the minister said.

Ms Laverley said the bank would consider the request in relation to the SGR and future projects, but added that all project write-ups should specify how the private sector would be sufficiently involved.

The $696.41 million package approved by AfDB for the project in December included $597.79 million to Tanzania in the form of loans and guarantees and $98.62 million to Burundi in the form of grants.

The lender said in a December 12 statement that the money would be obtained under various financing structures. It also pledged to help in mobilizing additional financing of up to $3.2 billion from commercial banks, development finance institutions, export credit agencies and institutional investors.

The total cost of the project across Tanzania and Burundi is currently estimated at nearly $3.93 billion, which is over four times the initial $900 million estimate when the two countries signed their joint memorandum of understanding for the project in January 2022.

It is understood that the stretch from Uvinza to Musongati will be built as a cooperative venture between both countries as efforts continue to find funding for another link to Kindu in DR Congo.

Burundi expects to use the rail link to transport at least three million tonnes of minerals annually from Musongati, which is estimated to have the 10th largest nickel deposits in the world at 150 million tonnes plus other minerals such as cobalt and copper, to the port of Dar es Salaam along with around one million tonnes of other cargo.

At least 80 percent of Burundi’s import and export cargo is currently shipped through the port of Dar es Salaam, according to Tanzania Ports Authority figures.

The Tanzania-Burundi SGR link is also envisaged to stimulate agricultural exchange activity and transit trade in general between the two countries through the central corridor while further easing cross-border movements within the East African Community bloc following the entry of DR Congo in mid-2022.

Negotiations for additional SGR links from Tanzania to Rwanda and Uganda are still ongoing.

Tanzania’s $7.6 billion SGR project, runs over 1,600 km from Dar to Mwanza on the shores of Lake Victoria and Kigoma along Lake Tanganyika, is being built in five phases by contractors from Turkey and China.

The first phase, covering 300 kilometres from Dar es Salaam to Morogoro, has been completed and trial runs are already underway with official cargo and passenger services set to be launched in July.

It is expected to cut travel time between the two points from five hours on the old metre gauge railway to less than two hours at average speeds of 160km per hour.