16 February 2017

Uganda: Kampala, Addis SGRs - Same Specifications, Different Costs

Photo: focac/China Daily
Construction of Nairobi terminus of SGR railway by China Road and Bridge Corp in Nairobi, Kenya.

Even as the transport ministers of Uganda and Kenya head to Beijing later this month to demonstrate to China Exim Bank - the financiers of the two countries' standard gauge railway projects - progress towards building a seamless rail network, Kampala is embroiled in a fight over the cost of the project.

At issue is the $2.3 billion engineering, procurement and construction contract for the 273km eastern route that starts at Malaba and terminates at Bukasa, near Kampala, translating into $8.42 million per kilometre of the track.

The eastern leg is critical for Uganda's economy as it is the main route for imports and exports, connecting with Kenya's proposed Malaba-Naivasha-Nairobi-Mombasa SGR line.

The argument over the cost comes after the Parliamentary Committee of Physical Infrastructure presented a report based on a visit to Ethiopia.

"The committee notes that Uganda's proposed SGR has the same specifications as regards design and operating speeds and is expected to serve the same purpose as the Ethiopia and Kenya networks," the report said, adding that Ethiopia paid $5 million per kilometre of track.

But officials in Kampala defend the cost estimates for Malaba-Kampala as "realistic" because of the topography, terrain and hydrology of the route. According to Kasingye Kyamugambi, the SGR project co-ordinator, the MPs should distinguish route length from track length.

For instance, the track length takes into account structures such as the extra tracks that are built at switching stations, which bring the track length to 338km, hence putting per kilometre cost at $5.9 million, although going by the 273km route length, the cost per kilometre is $7.3 million.

"These physical parameters determine the number of bridges, viaducts, size of embankments, geotextiles and geogrid usage, drainage facilities, etc," said Mr Kyamugambi. More importantly, he added, Uganda is building China Class 1 SGR as agreed under the Northern Corridor Integration Projects (NCIP) protocol, while Ethiopia's SGR is built to China Class 2 standard.

"Comparing Ethiopia with Uganda and Kenya is not fair and it is illogical," he added.

But chairman of the committee Denis Sabiiti, who is an engineer, said Uganda is misreading its own EPC contract. He queries the rationale for Uganda to seek financing for structures that could be redundant or add no value for the project's operation.

"You can have the NCIP protocol but what you build on the ground is different," he said.

For example, class is determined by among other things speed; Class 1 SGR speeds range from 150-300kmh, while the Class 2 maximum speed is 120kmh. The passenger train for Uganda's SGR is a maximum 120kmh while the cargo train will move at a maximum of 100kmh.

Other things that determine class are connectivity role, annual freight capacity, curvatures, design period and nature. Class 1 has a capacity of 20 million tonnes or more annually while Class 2 has a capacity of 10 million tonnes.

"It is important to note that we are using Chinese classification. There's no universally agreed classification of railways," he added.

However, available documents show that the Ethiopian SGR, which Mr Kyamugambi says is Class 2, will haul 25 million tonnes annually.

SGR officials in Kampala argue that there are costs in the EPC contract that the Uganda government signed with Chinese Harbour and Engineering Company (CHEC) that explain the project cost variation from that of Ethiopia. For example, CHEC will also provide locomotives and rolling stock at a cost of $180 million, build a polytechnic in Tororo, eastern Uganda for $30 million, staff facilities for $25 million and spend $20 million to improve the Kampala railway station.

Although the contract states that Uganda's SGR design speed is 120kmh for passenger trains, it has a clause that says there should be "consideration that track structures be designed for future high speeds of 160kmh."

However, in the same contract, CHEC advised that according to forecast analysis of traffic volumes in Uganda, "it will not be necessary to operate at 160km/h for a considerable period", and warns that the design for track structures to allow high speeds was not factored into the initial cost.

The Kenya axle load is 25 tonnes - same as Uganda - but according to the SGR contract, Kampala wants this improved to 32.5 tonnes. This means this additional weight can only apply on the Ugandan side, though the train is moving through Kenya to Mombasa. Moreover, to build structures to improve axle load, CHEC warns, will push the cost up by 13 per cent.

Based on these risks and lessons from the Ethiopian SGR journey so far, parliament advised that government "revisit and renegotiate the EPC contract" for the eastern route with a view to constructing the railway to Class 2 standards as envisaged in the contract, to reduce the cost of construction.

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