Uganda said it canceled a deal with a Chinese contractor to build a $2.3 billion railway after failing to secure Beijing’s financial backing for the project.
The East African nation has been in talks with Yapi Merkezi to take over development of the project and expects the Turkish company to submit an expression of interest in weeks, according to Perez Wamburu, Uganda’s project coordinator.
“The contract was canceled, it didn’t work out,” Wamburu said in an interview on Jan. 12.
It marks the end of more than eight years in which Uganda has sought Chinese funding for a project to build the 273-kilometer railway from its border with Kenya to its capital Kampala, continuing Ugandan President Yoweri Museveni’s plan to develop one delayed regional transport hub.
Donors have not been obliged to back the plan since 2015 amid concerns it may not be viable if a link to the Indian Ocean coast in neighboring Kenya is not completed within the same timeframe. Kenya built 730 kilometers of its rail line from the port city of Mombasa to Naivasha with Chinese loans, but has not yet determined when it could connect to Uganda.
Uganda’s decision to end its contract with China Harbor Engineering Company could help it consider an alternative route through its southern neighbor Tanzania, where Yapi Merkezi is already building a new railway.
Museveni said in a December 2022 interview that the option is already being considered should his country and Kenya fail to synchronize their railways’ construction schedules.
Yapi Merkezi chief executive Basar Arioglu declined to comment when contacted on January 12.
China Harbor Engineering did not immediately respond to a request for comment.
Wamburu said Uganda is considering raising funds for the project through syndicated loans from lenders such as export credit agencies.
