TANZANIA BUILDS AN ELECTRIC RAILWAY LINE AT A HALF PRICE THAN KENYA’S DIESEL ENGINE SGR

 

The only flag still missing from the railway master plan of the East African region ratified in 2008 is that of Tanzania.  It is not missing by mistake.

Tanzania, which is East Africa’s most populous country, was not on the table when the presidents of Kenya, Uganda, Rwanda and Southern Sudan sat to ratify the protocol for the development of a Standard Gauge Railway (SGR) connecting the port of Mombasa to Kampala, Kigali and Juba. Instead, Tanzania opted to walk alone and only bring on board any of its neighbours that would buy into its vision.
As Kenya rushed to build the first phase of its modern rail in record speed to the envy of its neighbours, Tanzania took a back seat, the way a second born child would do, lurking in the shadows and learning from the mistakes of his elder brother, then retreated to plot how to do a better job when his turn came.

And before Kenya could finish bragging about its fete in building the best railway in the region since the last century, Tanzania signed a second contract that will see it build an electric railway line that will move nearly twice as fast as the Kenyan line but at a fraction of the cost.

Last week, Dar, which has upped its silent rivalry with Kenya as it races to compete for the top spot as the economic power house in East Africa, awarded a $1.92 billion contract to a Turkish firm to build 422 kilometres of its SGR.

Though this is just a fifth of the total line that Tanzania plans to build, the deal has shone a new spotlight on costs of building railways in the region. It is also set to reignite debate on the viability of big infrastructure projects as each nation fights for title of the transport hub of the region.

Tanzania said its electric railway has been designed to support a maximum speed of 160km per hour for passenger trains and 120km per hour for freight. It is expected to be complete within 30 months. This pales in comparison to Kenya’s line whose passenger’s train has a maximum speed of 120 kilometres per hour, and its freight will be doing 80 kilometres per hour at best.

This means that in every hour, the Tanzanian train would cover an extra stretch of 40 kilometres ahead of the Kenyan train. Besides speed, Tanzania’s line also appears to be slightly superior since it is electric. Kenya opted for diesel-powered engine that can be upgraded into electric in future.

At $1.92 billion, which translates to about Sh192 billion at current exchange rates, Tanzania appears to have secured the cheapest railway construction deal in the region, given that it will be spending nearly half of what Kenya spent to build the first phase from Mombasa to Nairobi. Kenya’s line between Mombasa and Nairobi, which was slightly longer by about 50 kilometres, was constructed at a cost of $3.8 billion (Sh380.4 billion).

This cost does not factor in the interest on loan, the 20 per cent depreciation of the currency and the Sh11.7 billion paid on land acquisition. At the time of negotiating the contract in 2012, the dollar exchange rate was Sh87. But the dollar is now more expensive to buy and is currently trading at about Sh103 on average

“With the volatility of the exchange rate, it will be a challenge estimating the total financing cost of the project by the time the loan is paid off in approximately 20 years,” Kenya Railways said in an earlier response to Sunday Standard. Tanzania did not fall for the temptation to go for a government-to-government deal that Kenya used to single source China Road and Bridge Corporation (CRBC).

Kenya handed the contract to the Chinese firm without a fight after the Chinese government dangled billions to fund the railway on condition that the contract would not go through a competitive process. As the Turkish firm assembles its tools to start the construction of this new stretch, it appears that the decision by Tanzania to stick to a competitive process after cancelling an earlier contract awarded to a Chinese firm to build the high-speed electric line could have paid off.

President John Magufuli quietly terminated a contract awarded to Chinese Construction Company in 2015 due to allegations of corruption. Kenya chose to look the other way from the allegations of corruption and cost inflation that marred the SGR construction in the initial stages and is set to march on. But Tanzania terminated the contract and immediately invited fresh bids. This is what saw the deal last week awarded to Yapi Merkezi Insaat VE Sanayi As, a Turkish firm based in Istanbul. The headache for Kenya and Tanzania now is how to pay for the big railway projects without falling for the temptation to continue the borrowing spree.

China Exim Bank, which is funding the Kenyan line, was expected to finance the Tanzanian line but withdrew after the contract was terminated. This saw Tanzania turn to the other BRICS nations seeking for finance. President Magufuli in May asked his South African counterpart Jacob Zuma to help the country secure soft loans from Brics Development Bank. The BRIC grouping includes South Africa, which has good trade relations with Tanzania, Brazil, Russia, India and China.

ALSO READ: Repeat election could delay SGR cargo train plan In August, the African Development Bank came to the aid of Tanzania, and agreed to finance part of Tanzania’s central railway projects after several stakeholders pulled out.

The Tanzanian line is the closest to the Kenyan one in terms of terrain, location and standard offering a better benchmark for comparisons. The other closest line is the Ethiopian that was launched recently but is a lot different to the line Kenya is building. Crossing corridors Some of the reasons that have been cited for differences in prices for the railway projects in the region include the number and sizes of train stations, the number of locomotives, freight wagons and passenger coaches.

But all the other things do not account for more than a third of the entire cost. In explaining why Kenya’s line appeared to be more expensive than Ethiopia, the government maintained that Kenya had other features that made it a lot more costly. Kenya’s line has one port station, two major passenger stations in Mombasa and Nairobi, and seven passenger intermediate passenger stations at Mariakani, Miasenyi, Voi, Mtito Andei, Kibwezi, Emali and Athi River and 23 crossing stations.

It also has 98 Bridges covering 29 kilometres of the railway line and has Nine Wildlife Animal Crossing Corridors erected within Tsavo East and Tsavo West National parks for wildlife to pass under the SGR line. The crossing corridors are over seven metres high and at least 70 metres wide. Tanzanian state-run railway firm Reli Assets Holding Company Ltd (RAHCO) said the Turkish firm will design and construct the railway line. This is the second infrastructure project won by the company in Tanzania this year. The complete features are yet to be revealed.

By Standard media Kenya

https://www.standardmedia.co.ke/article/2001256729/tanzania-building-electric-railway-at-half-price-of-kenya-s-diesel-sgr-line

Dear Mr. President Uhuru Kenyatta

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