A major infrastructure project announced early this week to develop rail and port networks to link the east African nations of Tanzania and Uganda could cost up to $3 billion.
The two countries will jointly carry out the project which will involve construction of a rail network at a cost of $1.9 billion and the construction of sea, lake and greenfield ports.
"The total cost of the project is estimated at $3 billion," said a statement from Tanzania's Transport Ministry seen by Reuters on Friday.
"Some $1.9 billion will be for rail networks, $695.5 million for the construction of a greenfield port in Mwambani (Tanga region, Tanzania), $72.6 million for the Musoma port (in Lake Victoria) and $320 million is for a new greenfield port near Kampala (the Ugandan capital)."
The project would also involve the purchase of railway rolling stock after the upgrading of the existing Tanga-Arusha railway line in Tanzania to standard gauge.
Tanzania's Transport Minister Omari Nundu and Uganda's Transport and Works Minister Abraham Byandala signed a memorandum of understanding for the project in Dodoma, Tanzania, on Wednesday.
Landlocked Uganda mostly relies on the Kenyan port of Mombasa to move its imports and exports.
It discovered commercial petroleum deposits in the Albertine Rift basin in the west of the country in 2006 and production is expected to commence early next year.
The two governments said they would pursue a mix of options to finance the joint infrastructure project, including seeking loans.
"The governments of the two countries have started negotiations with various development partners ... we will increase our efforts in seriously mobilising funds from our own sources, from development partners, from private sectors and from financial institutions," Nundu was quoted as saying in the statement.
The statement said implementation of the project would start in the 2011/12 financial year with the commencement of a feasibility study.
TZ, Uganda infrastructure deal to cost $3bln