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Contractor Works to Fill $us 1.8bn Funding Gap in Tanzania SGR

CIVIL works contractor Yapi Merkezi is working with the government of Tanzania to secure additional funding for its flagship $US 10.4bn Standard Gauge Railway (SGR) project, joining a delegation led by finance minister, Mr Mwigulu Nchemba, in talks with potential funders in Europe.

Yapi Merkezi is main contractor for the first four lots of the SGR, involving the construction of 1225km of new 1435mm-gauge railway from Dar es Salaam to Isaka.

With $US 1.5bn secured to finance lots 1 and 2 of the project, efforts are now underway to find an additional $US 1.8bn for lots 3 and 4, where $US 400m has already been secured.

“As the facilitator of SGR project financing, we were part of the visiting group for financing discussions that took place in Spain, Poland and Sweden,” Yapi Merkezi vice-chairman, Mr Erdem Arioglu, told The East African.

He added that Yapi Merkezi had participated in the meetings to provide support and assistance to the government delegation, as well as export credit agencies involved in the project, “on the clarification of mainly technical issues.”

In partnership with Mota-Engil Africa, Yapi Merkezi was awarded SGR lots 1, 2 and 3 covering the 1090km from Dar es Salaam to Tabora in 2018. It later signed a $US 900m contract in July 2022 to build the 165km Lot 4 from Tabora to Isaka.

Lots 1 and 2 of the project are 98% and 95% complete respectively, and work on both sections is expected to finish by early 2026. Completion of lots 3 and 4 is expected in early 2026, with these sections now 67% and 17% complete respectively.

According to Arioglu, work has been delayed by the Covid-19 pandemic, the impact of the invasion of Ukraine on the supply of materials, and extensive rainfall in some areas along the route of the new railway.

“Environmental and social studies are also taking some time which is a requirement of the project finance package,” he told The East African.

Lot 5 of the SGR project, covering the 234km from Isaka to Mwanza, has been awarded to China Civil Engineering Construction and China Railway Construction Corporation and is 36% complete.

The African Development Bank (AfDB) has agreed to contribute $US 3.05bn towards funding Lot 6 from Tabora to Kigoma, and Lot 7 from Uvinza to Malagarasi that would improve connections with the Democratic Republic of Congo.

Source : International Railway Journal