DAR ES SALAAM, Tanzania
Finance ministers from Tanzania and Zanzibar have embarked on fundraising for the standard gauge railway (SGR) project in the wake of the main contractor, Turkish firm Yapi Merkezi, showing signs of financial distress.
Infrastructure, energy, transport and health were on the agenda as Tanzania’s Minister for Finance, Mwigulu Nchemba met Johan Forssell, Minister for
International Development Cooperation of Sweden |
This has raised concerns of
further delays on the first three phases of the 2,100-km railway seen as
crucial to place Tanzania in position as a key trade corridor for East and
Central Africa.
Tanzania’s Finance Minister,
Mwigulu Nchemba, was on a European tour over the past fortnight, during which
he held talks with officials in several countries regarding their possible
involvement in the SGR project, whose estimated total cost upon completion is
$10.4 billion.
Our reporter has learnt that
Nchemba’s efforts drew tentative pledges from Spain and Sweden.
Zanzibar Finance Minister
Saada Mkuya managed to canvass a similar commitment from the African
Development Bank (AfDB), which is willing to provide over $3 billion for the
project.
Questions about the ultimate
fate of the SGR, which Tanzania sees as a launch pad for stronger transit trade
ties with inland neighbour countries using the Central Corridor, came up after
reports emerged from Turkey of a tug-of-war between the Yapi Merkezi company
and its workers assigned to the project in Tanzania.
The company, in partnership with Portuguese firm Mota-Engil Africa, was awarded Lots 1, 2 and 3 of the projects covering a total of 1,090 km from Dar es Salaam to Tabora. Official reports say while Lots 1 and 2 (Dar-Morogoro-Makutupora) are almost complete, the third lot (Makutupora-Tabora) had reached 67 percent completion by the time the Turkish firm reportedly started having financial problems.
During his visit to Stockholm,
Mr Nchemba on September 27 gave assurances that the project was progressing
well, and the first two phases being handled by Yapi and Mota-Engil were at 98
percent and 95 percent complete, respectively.
It was the first formal
statement by any Tanzania government official on recent developments in Turkey
in the face of a wall of silence erected by the Works Ministry, Tanzania
Railway Corporation, the SGR project coordination department, and Yapi Merkezi
representatives when approached for comment on the unfolding events in
Istanbul.
Phone calls and text messages
to Works Minister Innocent Bashungwa, TRC director-general Masanja Kadogosa and
SGR project coordinator Machibya Kadogosa (no relation to the DG) have all gone
answered for two weeks.
Physical visits to the TRC and
Yapi Merkezi offices in Dar es Salaam did not yield much, with an official at
the office, who asked not to be identified, expressly stating that the firm’s
contract terms with the government prohibited it from commenting publicly on
the project.
In Stockholm, Mr Nchemba held
talks with representatives of Sweden’s Export Credits Guarantee Board (EKN),
which is understood to have acted as guarantor for several banks that sponsored
Lots 1 and 2 of Tanzania’s SGR.
He asserted that initial test
runs for the Dar-Morogoro-Makutupora stretch would proceed as scheduled in
December this year. The test runs were postponed several times this year
without proper explanation and were last scheduled for August, only to be
pushed back.
The minister told EKN
officials that Tanzania was seeking funding for Lots 3 and 4, which will cover
501 km from Makutupora to the Isaka dry port; Lot 3 being the one that Yapi
currently appears to be having trouble finishing.
On an earlier stopover in
Madrid on September 22, Mr Nchemba met with Spain’s Deputy Minister for Industries,
Trade and Tourism Xiana Mendez, who pledged support for the SGR project in the
form of loans, loan guarantees and insurance for Spanish companies that win
tenders for the remaining phases of the railway that have not yet been
contracted out.
According to Ms Mendez, these
include Lots 3, 4 and 5 from Makutupora to Mwanza and a planned additional
strip from Tabora to Kigoma. At least $3.24 billion will be required to
complete the three lots. Mr Nchemba said 12 Spanish firms had been roped in to
offer services such as supplies of building materials for the railway.
The AfDB’s pledge of $3.05
billion was made at the Korea-Africa Economic Cooperation conference in Busan,
South Korea, and is targeted at the Tabora-Kigoma and Uvinza-Malagarasi
stretches, which have been tagged as Lots 6 and 7 of the project respectively.
The bank’s president Dr
Akinwumi Adesina said after a meeting with Zanzibar’s Minister of State
President’s Office responsible for finance and planning Saada Mkuya on the
sidelines of the conference on September 19 that the bank would “work on making
the funds available on time.”
Dr Adesina also pushed for
more private sector involvement in the project and urged Tanzania to make more
use of AfDB’s non-sovereign window, which caters for private sector borrowers
for state-related projects.
AfDB’s financial funding to
Tanzania through this window is reported to have increased from $218 million to
$756 million in the past few years. The Pan-African lender also pledged $60
billion to sponsor a feasibility study for Zanzibar’s envisaged Mangapwani port
project.
The Tanzanian delegation to
the Koafec also visited factories in Changwon, South Korea, where locomotives
for the SGR are being assembled by Korean firms Hyundai Rotem and Sing Sung
Rolling Stock Technology.
The two firms are under
contract with Tanzania to supply 17 SGR locomotive engines, 59 accompanying
carriages and 10 Electric Multiple Units before the end of 2023.
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