HomeUganda seeks US$ 8bn loan from China for rail network upgrade

Uganda seeks US$ 8bn loan from China for rail network upgrade

The Dubai World Islands Project
The Dubai World Islands Project

Ugandan Government hopes to secure US$ 8bn from China to fund a planned upgrade of its railway network. This comes at a time when the Chinese Government is playing a major role in the development projects in Africa as a main lender.

Earlier on, the government of Uganda had signed a Memorandum of Understanding (MoU) with the China Harbor Engineering Company (CHEC) for the upgrading and expansion of the country’s railway network to standard gauge railway status.

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The oil deposits found in the Western region of Uganda will need rail transport means for its exploitation. This is mainly for the transportation of heavy machinery to be used at the sites, and the transportation of cargo from the mine sites to various destinations.

The portions of the rail network the government is seeking funds for upgrade into standard gauge railway are the ones running from the border of Kenya with Kampala and South Sudan, and parts of Western Uganda where the oil fields have been discovered.

Oil production from these fields is expected to commence by 2017. Critics are, however, skeptical on how the funds are going to be repaid, considering the number of multimillion dollar projects the country has undertaken through loans.

The East African Community member states have set March 2018 as a target for upgrading of the regional railway network to standard gauge railway system.


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