Chinese firm CHEC given $8bn railway deal
Publish Date: Aug 30, 2014
Chinese firm CHEC given $8bn railway deal
An old slow rail engine. The faster the rail system is, the more passengers it ferries in a single day
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By David Lumu & Samuel Balagadde

The Government has signed an agreement, finally giving away the giant and lucrative deal to upgrade and expand Uganda’s railway network to standard gauge, to a Chinese firm China Harbor Engineering Company (CHEC).

The deal is estimated to be worth $8b (about sh20trillion).

Two Chinese companies – CHEC and state-owned China Civil Engineering Construction Corporation (CCECC) – have been involved in a fight for the deal. CCECC had earlier in 2012 been given the deal, which was later cancelled by the Government.

On Wednesday, Eng. John Byabagambi the state minister for works and representatives of the CHEC signed a Memorandum of Understanding (MoU) which in principle gives the deal to the firm.

According to Suzan Kataike, the spokesperson of the works ministry, Byabagambi said they will be no delays in the construction of the standard gauge railway (SGR) from Malaba to Kampala and Bukasa port.

“The minister signed a new MoU with CHEC to construct the standard gauge railway line and terminated the MOU we had with CCECC,” she told New Vision.

Work with army

According to the agreement, CHEC will work closely with the UPDF Engineering Brigade and also construct a polytechnic school in Uganda for continuous training of army officers in technical and engineering skills.

A statement issued by CHEC’s representatives also expressed commitment to the above MoU singling out that the Government of South Sudan has also selected the company to upgrade her railway line.

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

“Through our partnership with the Uganda People’s Defense Force (UPDF), we will collaborate to build a pioneering UPDF Corps of Engineers by training army officers in infrastructure development. UPDF will work with CHEC in construction of the standard gauge railway. This initiative will also include the construction of a UPDF Polytechnic which will continue training officers,” the statement noted.

'Study not fit'

Meanwhile, the ministry of works also issued a separate statement dismissing as inaccurate the feasibility study done by CCECC for the SGR project.

“The feasibility study, read together with the supplementary comments and responses provided by CCECC do not fit the purpose intended to move on to the next stage of negotiating a commercial contract in light of the time frames set out in the SGR protocol,” the ministry statement said.

CCECC claimed it investedsh50b ($19.3m) on feasibility studies for the routes covered under its MoU with the Government.

The feasibility study was one reason CCECC is advancing to claim the SGR project.  Kataike said that the contract with CHEC would put a stop to a previous protracted battle among the railway actors that had threatened to delay the railwayline construction.

Stalled talks

On July 23, the High Court had overruled Byabagambi’s decision to cancel the CCECC deal. The court asked the Government to negotiate with the company over the deal.

Early this month, Byabagambi invited CCECC for talks, but they stalled after two days of meeting at the Uganda Railway Corporation headquarters after CCECC representatives cited bias on the side of the Government team headed by the minister.

Subsequently, Byabagambi wrote on August 22 to CCECC representatives cancelling any further talks with them and instead called on CHEC for more fruitful negotiations about the railway line.

“I have been given a green light by the Government departments to move along with negotiations, but with other companies, which will be invited to submit their bids, including China Harbour and not with CCECC,” he said.

However, CCECC’s representatives (Ligomarc) told New Vision that “gloves are now off” and that they will continue to challenge Byabagambi’s decision to award the contract to CHEC.

The fight between the two Chinese companies had put government in a fix and also sucked in ministers.

The SGR is one of the Northern Corridor infrastructure projects that the East African Community partner states started planning as early as2004, but in June 2013, the presidents of Kenya, Uganda and Rwanda agreed to fast-track it, with a March 2018deadline.

Fastest train

The Standard gauge is a used railway track gauge. Except for Russia, Finland, Portugal and some upgraded lines in Spain, all high-speed lines are this gauge.

However, in Africa only South Africa and Ethiopia have SGR.

According to available information, currently, the fastest train along a narrow gauge rail is Australia’s Queensland Rail’s tilt train with a maximum speed of 210km/h compared to SGR trains which can do up to 320km/h.

The faster the rail system, the more passengers it ferries in a single day.

The SGR project agreed on by Kenya, Uganda, Rwanda and South Sudan will see establishment of SGR line connecting Mombasa to Malaba (with a branch line to Kisumu City) onward to Kampala, Kigali (with a branch line to Kasese town) and Juba (with a branch line to Pakwach town).

Also related to this story

Rwanda, Uganda kick-start regional railway project

Kenya launches $13.8bn China-built railway to boost trade

Railway reconstruction can be a boost to Broadband

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