China asks for business plan to fund EAC railway project

The chinese government has reportedly expressed readiness to bankroll the proposed East African standard gauge railway (SGR) but has asked that partners on the multi-billion Northern Corridor project present feasibility studies to prove the project’s bankability. According to a progress report presented to the Presidents of Kenya, Uganda, Rwanda and South Sudan during last week’s 10th Northern Corridor summit held in Kampala, China wants to have more details on the project before it can commit funds. The project’s estimated budget is about $14 billion. The Chinese request follows a joint visit to Beijing by ministers for foreign affairs and infrastructure from April 26 to May 1, to promote various infrastructure projects that are being implemented, with SGR taking centre stage. In China, the delegation from East Africa met with top executives of the Chinese Export and Import Bank (Exim), which is expected to fund the project. The bank is state-owned. “The Chinese government expressed a positive feedback and recommended to finalise feasibility studies for further discussion,” the ministers told the presidents. Last week, in Kampala, ministers for foreign affairs in the four countries were tasked by the summit to coordinate the next joint visit to China which is expected to take place before December. But, in the meantime, the Northern Corridor partner states will be under pressure to get the required studies ready before the next trip to China for use by the Exim Bank executives to evaluate the project’s profitability. It was also agreed in Kampala that partner states would finalise the bankable project proposals for SGR and report progress during the next round of meetings. The New Times understands that partner states are at different stages of implementation and preparation of feasibility study reports; but during the Kampala summit, they vowed to complete them by December. For instance, Uganda only signed an engineering procurement and construction (EPC) contract agreement with China Habour & Engineering Company (CHEC) in March, for the SGR’s northern and eastern leg to a tune of $3.32 billion. The northern and eastern route of SGR connects Uganda and South Sudan and the two countries are collaborating on the feasibility study. China has also reportedly provided $16 million grant to fund technical studies for bankable proposals on the route. Rwanda and Uganda are expected to cooperate on the western and southern routes of SGR that will connect the two countries at Mirama, in Ntungamo District in Uganda and Birembo in Rwanda’s Eaestern Province. During the summit in Kampala, the two countries reportedly signed an agreement with a contractor to launch activities for the route’s engineering, procurement and construction process. Meanwhile, Kenya reported that the feasibility studies leading to bankable proposals for the section Nairobi-Nakuru-Kisumu-Malaba are underway and these will form part of the financing requirements and the basis to approach Exim Bank. Also ready is the business plan for SGR that was prepared by the partner states’ ministers for finance and this too will be presented as part of the documents to convince Exim Bank executives of the project’s bankability. SGR protocol unendorsed Only Uganda and Rwanda have completed the ratification of the SGR protocol; Kenya and South Sudan are yet to do so and were urged during last week’s summit in Kampala, to have done so by the next summit. The protocol is important as it formalises the pledge by the four partner states to jointly source for financing of SGR project. Kenya pledged to have the protocol ratified by June 15, while South Sudan, whose president was represented by Kuol Manyang Juuk, the Minister for Defence and Veterans Affairs, said its ratification was awaiting parliamentary approval. The Kampala summit gave Kenya and South Sudan until July 31 to ratify the protocol. editorial@newtimes.co.rw

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China asks for business plan to fund EAC railway project