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Nkrabea Nni Kwatibea
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East Africa: Dar-Kigali-Bujumbura Railway to Be Ready by 2014​
Kigali — The Tanzania, Rwanda, and Burundi railway, which starts this year is expected to be completed in 2014, according to experts.

Construction experts said last week in Kigali that construction costs might drop by 30%.

The Dar es Salaam-Isaka railway line will also be modernised to 1,435mm standard gauge railway.

The new development comes after earlier studies had indicated that the project would cost US$3.5 billion.

Rwanda's infrastructure minister Eng. Linda Bihire last week said costs have dropped to $2.450 billion. Rwanda is coordinating the project.

The new figure was revealed at a donor round-table on the railway project held March 16-17, 2009. She said World Bank, financers, miners and other stakeholders found the project viable. The meeting was organized by the governments of Tanzania, Rwanda and Burundi.

The three governments plan to construct a modern high-speed train, with a minimum speed limit of 120 kilometres per hour.

This means that imports will be delivered in Kigali within a day, eight hours to be precise, contrary to the six days they have been taking from Dar es Salaam.

The development will see most importers and exporters shift from Mombasa port to Dar es Salaam port.

If introduced, this is going to be the fastest train in the East African region with capacity to haul several tonnes of cargo using 2,000 wagons.

With the small gauge rail of 1,000mm in width, the average speed for a train on the Kenya-Uganda Railways can cruise is 40 kilometres per hour while that of the old Tanzania Railways is 20 km per hour.

Pushing for the extension of railway line from the coast to Kigali comes at a time Rwandan importers who mainly depend on road transport are complaining that up to 40 percent of their capital is spent on transport.

The costs have been further pushed up by the strict enforcement of the three-axle load limit, many roadblocks and the bad roads in the region.

Records show that whereas a Rwandan importer spends between 40 and 50 percent of the value of the export on transport and insurance, the average for the world's developed countries is 8.6 percent and 17.2 per cent for the least developed countries.

Bihire assured transporters that when completed; transport costs will drastically decline to less than 20 percent.

When completed, Bihire said, about 4.5 million tonnes of minerals from Burundi and Tanzania will be hauled by the railway.

Experts who carried out the feasibility of the railway project are optimistic that the line will spur development and exploitation of untapped natural resources in Burundi and the Congo which will provide the critical level of tonnage to support the railway.

Bihire said the project will also see the Dar es Salaam ports modernised and the number of berths increased to ease congestion.

Martime records show that the number of containers transiting Tanzania is expected to increase by as much as 1,200 % or about 3 million foot equivalent units (FEUs) in the next 20 years. Last year Dar es Salaam Port handled 350,000 containers over the planned 250,000 containers.

East African Business Week
:banana:
 

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That's really good, but 5 years seems a long time for just 1-2 lines. How many decades would it take to build a network!
 

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Mutu ya Chuma.
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That's really good, but 5 years seems a long time for just 1-2 lines. How many decades would it take to build a network!
You have got to see the terrain in Rwanda and Burundi. It won't be easy to built rails on hundreds of kilometers on hunderds maybe thousands of hills.
 

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Nice, hope they build real high speed trains in Africa in the future. A 300 km/h connection from Nairobi to Mombasa would be nice.
 

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Thats what Ive been asking for for the longest time now, more rail links and better quality also.
Great news!
 

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Shrewd
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SGR Railway Dar es salaam-Isaka-Kigali|Keza-Gitega-Musongati Railway Project| Proposed

Dar es salaam-Isaka-Kigali/Keza-Gitega-Musongati Railway Project






• INTRODUCTION
The project involves three countries Tanzania, Rwanda and Burundi and concerning the Management of the Project, there is a Memorandum of
Understanding whereby Rwanda is leading the coordination, Tanzania is chairing and Burundi is the deputy chair.
Feasibility and preliminary studies are funded by the African Development Bank (AfDB).





• DESCRIPTION OF THE PROJECT
– 1,672 km rail network from Dar-es-salaam to key centers in Rwanda and Burundi
– 970 km of existing Meter Gauge line (Dar es salaam to Isaka)
– 702 km of new construction (Tanzania-396, Burundi-183, Rwanda-123)
Dar es salaam-Isaka-Kigali/Keza-Gitega-Musongati Railway Project



• INTRODUCTION
The project involves three countries Tanzania, Rwanda and Burundi and concerning the Management of the Project, there is a Memorandum of
Understanding whereby Rwanda is leading the coordination, Tanzania is chairing and Burundi is the deputy chair.
Feasibility and preliminary studies are funded by the African Development Bank (AfDB).





• DESCRIPTION OF THE PROJECT
– 1,672 km rail network from Dar-es-salaam to key centers in Rwanda and Burundi
– 970 km of existing Meter Gauge line (Dar es salaam to Isaka)
– 702 km of new construction (Tanzania-396, Burundi-183, Rwanda-123



• CURRENT STATUS
The Detailed study of Dar es salaam-Isaka-Kigali/Keza-Gitega-Musongati Railway Project is being carried out by a Canadian Firm”CANARAIL” in
association with GIBB Africa, a Nairobi-based East African consulting firm.
The progress of the study stands at 95%, the validation of the Final report is scheduled in October, 2013.





• PROJECT OBJECTIVES
– Provide modern, rail-based transportation service in the East African Central Corridor.
 Improve connection of landlocked countries to World and African economies
 Provide improved reliability for rail transport over Central Line in Tanzania
 Lower cost for imported goods in western East Africa
 Reduced deterioration of road networks
 Enhance financial attractiveness of potential mining developments
FREIGHT TRAFFIC FORECASTS MADE BY THE CONSULTANT(CANARAIL)






• Base case
– Diversion of existing cargo now moving through the ports of Dar es Salaam and Mombasa to the new railway (60% and 50% respectively)
– Incorporates future growth of existing mineral development in each country as well as estimated output of those mines that are currently under
development





• Low traffic represents base case for potential PPP investors (i.e. traffic that is 100% certain for achieving his minimum Return on Investment)






• The optimistic case
– Represents higher rates of diversion of existing traffic to/from Dar es Salaam and Mombasa (80% and 70% respectively).
All existing and likely future mineral developments are included as well as the Consultant’s reasonable estimation of additional developments
coming to fruition.





http://www.rtda.gov.rw/fileadmin/templates/documents/Info_current_status_of_the_Project.pdf
 

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Shrewd
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Tanzania to construct US$7b railway line from Dar to Burundi




The government of Tanzania has made strategic plans to construct a railway line from Dar-es-Salaam to Mwanza, linking central regions up to Burundi via Isaka.

This statement was made by the Prime Minister of Tanzania Mizengo Pinda, who also added that the rail will be a standard gauge railway that will help curb the frequent costs of repairs made to the existing railway line. The line will run from Tabora to Kigoma and Tabora to Mwanza, including some parts of Kailua region to Mpanda.

The project is expected to roll out in December this year and to be completed in the next four years at a cost of US$7b. The old railway line will continue to be used as the new one is being constructed.
The Prime Minister was on an official visit to the UK and the news was made while addressing the Tanzanians living in London. He urged the Tanzanians living in the Diaspora to be keen on investment forums that touch on Tanzania so that they are able to take opportunity of the investment opportunities available in the country.

Once completed, the railway line will have a uniform design specification which will permit seamless operation across the borders and, in turn, reduce costs. The line will also reduce the number of cargo handlers transporting goods via road, which will in turn reduce the rate of wear and tear of road infrastructure.
 

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High costs stymie standard gauge plan

THE government yesterday noted that the envisaged multi-trillion shilling central railway line project that was to be rebuilt to standard gauge level is for now too expensive for Tanzania to finance through own funds.
15 Comments
Finance and Planning Minister Dr Philipo Mpango said this yesterday when wrapping up the debate for the 2016/2017 development plan and budget framework.

Dr Mpango told the parliament that for the 15tril/- project to be commercially viable, it has to run through Burundi, Rwanda and the Democratic Republic of Congo (DRC).

He explained that it was hard to carry out the project through Railway Development Levy as it was previously suggested by some MPs.

The Minister noted that if such approach was to be applied “it was going to take the country over 300 years to complete the project”.

Funds generated through Railway Development Levy, according to the Minister stands at an average of 50bn/- per year. Dr Mpango noted that the government has not ignored the project, insisting that his ministry was one of the key stakeholders, as it depended on the venture as a backbone for the country’s economic growth.

“Just to set the record clear, Tanzania cannot afford financing the project using our own funds.” He expounded that through the support of the World Economic Forum (WEF) and African Development Bank (ADB), the central corridor has been found most commercially viable, thus the government was doing all it could to implement it.

“WEF and ADB are working closely with Tanzania to raise the required funds. The project will only be viable through Public Private Partnership (PPP).”

He noted that there are Chinese and American companies which have already shown interests to invest in the project. “We are going to look into the matter with our colleagues in transport ministry and see how we can implement the project,” he said. However, the Minister could not state exactly when the project would begin.

He noted that it was also important to consider improving the country’s major water gateway--Dar es Salaam port. In May last year, the then Transport Minister, Mr Samwel Sitta, issued a statement to Parliament, declaring that a Chinese consortium led by China Railway Materials, was awarded a $7.6 billion contract to build a 2,561km standard gauge railway from Dar es Salaam to Burundi, Rwanda and DR Congo.

According to Dr Mpango, the contract was revoked after the Public Procurement Regulatory Authority (PPRA) found that there were flaws in its tendering. Under the previous plan, the former President Mr Jakaya Kikwete, was listed to launch the construction project on September 15 last year.

Source: http://dailynews.co.tz/index.php/home-news/46716-high-costs-stymie-standard-gauge-plan
 

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THE government yesterday noted that the envisaged multi-trillion shilling central railway line project that was to be rebuilt to standard gauge level is for now too expensive for Tanzania to finance through own funds.
15 Comments
Finance and Planning Minister Dr Philipo Mpango said this yesterday when wrapping up the debate for the 2016/2017 development plan and budget framework.

Dr Mpango told the parliament that for the 15tril/- project to be commercially viable, it has to run through Burundi, Rwanda and the Democratic Republic of Congo (DRC).

He explained that it was hard to carry out the project through Railway Development Levy as it was previously suggested by some MPs.

The Minister noted that if such approach was to be applied “it was going to take the country over 300 years to complete the project”.

Funds generated through Railway Development Levy, according to the Minister stands at an average of 50bn/- per year. Dr Mpango noted that the government has not ignored the project, insisting that his ministry was one of the key stakeholders, as it depended on the venture as a backbone for the country’s economic growth.

“Just to set the record clear, Tanzania cannot afford financing the project using our own funds.” He expounded that through the support of the World Economic Forum (WEF) and African Development Bank (ADB), the central corridor has been found most commercially viable, thus the government was doing all it could to implement it.

“WEF and ADB are working closely with Tanzania to raise the required funds. The project will only be viable through Public Private Partnership (PPP).”

He noted that there are Chinese and American companies which have already shown interests to invest in the project. “We are going to look into the matter with our colleagues in transport ministry and see how we can implement the project,” he said. However, the Minister could not state exactly when the project would begin.

He noted that it was also important to consider improving the country’s major water gateway--Dar es Salaam port. In May last year, the then Transport Minister, Mr Samwel Sitta, issued a statement to Parliament, declaring that a Chinese consortium led by China Railway Materials, was awarded a $7.6 billion contract to build a 2,561km standard gauge railway from Dar es Salaam to Burundi, Rwanda and DR Congo.

According to Dr Mpango, the contract was revoked after the Public Procurement Regulatory Authority (PPRA) found that there were flaws in its tendering. Under the previous plan, the former President Mr Jakaya Kikwete, was listed to launch the construction project on September 15 last year.

Source: http://dailynews.co.tz/index.php/home-news/46716-high-costs-stymie-standard-gauge-plan
Is it feasible to raise such funds through our capital markets? The public can surely invest in it if they show a full and profitable business plan like any other public IPO. Let then the public benefit from the profits of this venture.
 

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Great idea but I suspect return on investment for an infrastructure project as large as this would be rather long term and so wouldn't, perhaps, look as attractive to your average local investor but the planners need to seriously pursue this as one of the investment streams....involve the other EA countries which stand to directly benefit from the project as well.
 

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Great idea but I suspect return on investment for an infrastructure project as large as this would be rather long term and so wouldn't, perhaps, look as attractive to your average local investor but the planners need to seriously pursue this as one of the investment streams....involve the other EA countries which stand to directly benefit from the project as well.
DIKKM will extend to Mwanza and Kigoma as well
 

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I am surprised the government at one point believed we could have funded this with our own funds. 15 trillion is around 10 billion USD (well it was at the time probably). We do not have that kind of money. I think our national budget is even smaller than that. I do not believe the public has that kind of capital to finance it too.

The biggest companies on the DSE also produce a capitalization of only 1 billion USD. Which includes the cross listed companies from Kenya. The scale and cost of this project also seems too big for our neighbor Kenya to finance on their own.

Hopefully, they can find a better solution to this project. It will help fuel development along the railway lines and reduce pressure on Dar-es-salaam.
 

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A frank admission by all accounts @Sputink but if one could get 10million people: businesses included, to invest on average $1000 each - obviously viable businesses would be expected to chip in a fair bit more - then the initial outlay starts to appear less of a pie in the sky and much more of an achievable target.
Surely there are millions of economically active individuals in the country? the entire population was knocking on 50million last time I checked and that's not to include those from the neighbouring countries who'd benefit directly from the project.

The tricky bit is in selling the idea to the masses and incentivising enough of them to actually take a bite. You just need to unleash some of your best and brightest on this: people good at devising great financial instruments.
 

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@A'Costa. In an ideal world that would probably work but our economy or income distribution would not be able to support a person dropping $1000 each. Especially with no clear return on investment in sight, especially in the short term. When someone invests a small amount like $1000 they expect quick return on investment. A project like this would take over 3 years to build and a few more to capitalize. Lets just assume they are willing to do so.

Looking at the populations of all the countrys lets just assume they have to foot the bill based on population distribution, it would mean tanzania would have to foot 70% of the bill. Often it is split by number of KM of track in each country.

70% of 15 tril /- is ~10+ trillion /- (5 Billion USD). TZS is expected to depreciate at 12% this year and looking at the price of Iron and Raw materials for railway construction. We can add a trillion shillings extra per year we wait.

With a 50 million population more than 50% is under the age of 18. If we assume all the population above 18 lives in a household of two. That is still 12 million households. Poverty level in Tanzania stands at ~30% (though i was unaware if this statistic included only the adult population). An interesting report from Tanzania I stumbled upon was that 98% of the country's household consumption was below 60,000 TZS in 2007. Less than $50 per month. it would take them over 3 years to source 1000 per household if they spent no money.

Well we remain with 2% that spends more than $50 a day. I wish there was a better breakdown. But if we assume this part of the population is willing to source that kind of money it leaves it in the hands of 240,000 people. Still a significant number.

Looking at the savings for business and some local banks. CRDB is worth around 1 trillion shillings and so is its counter part NMB. BOT net assets lie at 11 trillion, of which 50% is foreign currency. The bank holds around 2 trillion in cash and claim 3.5 trillion shillings in circulation. Even if we source money from the three top banks and pull out all shillings from circulation, we are short by about 2.5 trillion.

Note: These numbers are not really ment to prove anything, I just did some quick back of the envelope math and i am sure i must have miscalculated something, but it gives you the shear scale of our economy. I do not say such public venture is impossible but even our country's yearly tax revenue could not pay for this, and we have other things to run not just a railway.

We do have 6000 registered US dollar millionaires in Tanzania. Public-Private partnership projects are not unheard of or rare in the world, just the scale of this project for Tanzania is too big. Each millionaire would have to come out and foot 800,000 USD. I am not sure that each of of them is very patriotic and is willing to take such a big risk. How many of them will be willing to declare the source of their funds too?How many of them have even listed their companies on the stock exchange? Our three billionaires in the country also collectively have $3.5 billion worth in assets, none of which's companies have their companies listed.
 
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