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MINISTRYOFWORKSANDTRANSPORT

STANDARDGAUGERAILWAYPROJECT

DRIVINGSOCIALECONOMICTRANSFORMATIONTHROUGHDEVELOPMENTOFSTANDARDGAUGE

RAILWAY

1.0 INTRODUCTION

TheGovernment ofUgandahas put emphasis on infrastructure development in order to achieve the

aspirationsofUgandansasenshrinedintheUgandaVision2040.ThetargetistoobtainaGDPpercapita

ofUSD9500by2040.Infrastructuredevelopmentisprimarilymeanttoprovideaconduciveinvestment

climatethusattractinglargeforeigndirectinvestmentespeciallyinheavyindustriesandservices.Since

we have limitedmarket size and capacity, it is important that investors who are attracted primarily

produce goods for export to high-endmarkets in Europe, North America, Asia and other developed

countries.Itisimportanttoknowthatthereisworldwidecompetitionofattractinginvestorsbydifferent

countries,itisimperativethatourinvestmentclimateiscompetitiveatglobalstage.Theseinvestorsmust

beassuredofreliable,cheapandadequatetransportservicestothehighendmarkets.Reviewofworld

tradeandcountries’economicgrowthtrendsdepictthatparticipatinginglobalvaluechainsisimperative

forgrowth.

Notingtheaboveneed,theHeadofStateofKenya,Uganda,RwandaandSouthSudanundertheauspices

ofNorthernCorridor IntegrationProjects (NCIP)agreed todevelopa seamlesshighcapacity,modern,

reliableandsafeSGRsystemacrossthefourcountries.

StandardGaugeRailwayasabackboneoftransportinfrastructuremustprovideatransportservicefor

exportandimportthat iscomparabletootherservices inothercountries intermsofquality,costand

reliability.

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Thesecountriesandtheirneighborsareatdifferentstagesofdevelopingtheirrespectiverailwaysystems

inordertofullyparticipateininternationalglobaltradeandproduction.

Althoughdifferentpoliticalagendahavebeensetespeciallyonthedevelopmenttimelines,thecountries

are faced with challenges of raising the necessary resources either internally or through external

borrowing.Externalborrowingislargelydependentonthecountry’sGDP,DebttoGDPratio,Revenueto

GDPRatio,andthecountry’sriskasassessedbyinternationalcreditratingagencies.

Thetablebelowprovidessomeinformationonthekeymacroparametersfortherespectivecountries.

Indicator Uganda Kenya Tanzania Ethiopia

Population(Million) 38.32 46.79 52.48 99.47

GDPUSD(Bn) 25.61 69.17 46.70 69.22

PerCapitaIncome 668.3 1,478.3 889.9 695.9

CreditRating* B B+ NA B

Source:TheWorldFactbook-CentralIntelligenceAgency(2015figures)

*http://www.tradingeconomics.com-list/rating

Note:TheDebttoGDPratioforalltheabovecountriesisabove30%implyingthattheyallhavelimited

roomforadditionalborrowing.

2.0 WHYUGANDAISPRIORITIZINGTHENORTHERNCORRIDORASTHEPRIMARYROUTE

Uganda’sstrategicgeographicalpositioning,putsitattheheartoftheEastandCentralAfrica

logisticschainandcanevacuateitsproductsthroughtheportsofDjibouti,MombasaandDar

EsSalaamamongothers.

However,due tomany factors, theportofMombasa inKenyaand theportofDarAsSalaam in

Tanzania are anchor points for two transport routes—the Northern Corridor and the Central

Corridor—bothcrucial for thedomestic, regional,and international tradeof fiveEasternAfrican

countries.

Northern Corridor is the busiest andmost important transport route in East and Central Africa,

providingagatewaythroughKenyatothelandlockedeconomiesofUganda,Rwanda,Burundiand

EasternDRCongo.ItalsoservesSouthernSudan.

The less busy alternative transport network serving the landlocked Great Lakes Region is

throughTanzania,calledtheCentralCorridor linkedtoDarEsSalaam.ThisusesTanzania'sCentral

Line.

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Table2:ProvidessomeoftheadvantagesoftheNortherncorridorovertheCentralCorridoreven

iftheSGRisdevelopedasplannedinthethreecountries.

ITEM THENORTHERNCORRIDOR

(Mombasa–Kampala)

THECENTRALCORRIDOR

(Dar Es Salaam-Morogoro-Tabora-Mwanza-

Kampala)

Distance

1,250KM 1548KM (1228Km on land and 320km on

water)

Capacity per

day

8640containers(if40SGRtrains

perday,eachtraincarrying216

containers)

216 containers (due to limitations on the

berth, vessels and loading and offloading

time). Each wagon ferry/vessel carries 44

containers.

Transittime Oneday(24hours) Threedayspertrain(72hours-optimistic)

Restrictions Norestrictions Some freight like oil and other chemical

productscannotbecarriedonfreshwater

Major trans-

shipment

None Two- AtMwanza and Port bell. Each vessel

carries44containers.Thusforatraincarrying

215 containers will require 5 vessels to

evacuatethefreightonthelake

Capacity of

Port

Mombasaport isnearly3times

biggerthanDarEsSalaamPort.

Planned expansion in the port

underway

DarEsSalaam,AthirdofMombasaPort

Current

freight to and

through

Uganda

10 Million tonnes of cargo per

year

0.5Milliontonnesofcargoperyear

Access to

higher end

markets

NearertheSuezCanalthemajor

shippingway

Further from Suez canal and will require

dedicatedVessels

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Expected

completion

time

Around 2020 -Kenya has nearly

completed Mombasa-Nairobi

SGR section (472KM) and is

already constructing the

Nairobi-Naivasha SGR Route

(120KM). Already sourcing for

financing for Naivasha-Malaba

section (369KM)). Thus already

nearingtheUgandanBoarder

Tanzaniahasnotcommenceddevelopmentof

the 1219km route from Dar Es Salaam to

Mwanza. Only contract for Dar Es Salaam-

Morogoro(205KM)signed.MwanzaandPort

Bellinlandportswillneedtoberedeveloped.

Newwatervesselswillberequiredtobebuilt

andbuildingavesseltakesaboutthreeyears.

Other

Infrastructure

requirements

Railwayinfrastructure Mwanza Port, Bukasa Port, Railway

infrastructureandVessels

TheimportanceoftheNorthernrouteisfurtheraugmentedbythealreadymuchbiggertradebetween

KenyaandUgandawhichisoverUSD1bn.

Despitedevelopmentoftherailway,cargocapacityonthecentralcorridorwillbeseverelylimitedbythe

constraintsonLakeVictoria,notably,eachwagonferry/vesselcarries44containerswhereasatraincan

carryupto216containers.Therefore,eachtraincanonlybeoffloadedontofivevesselsrequiringabout

15hourstoloadandoffloadthevesselsoneithersideofthelakethussignificantlyincreasingthetransit

timeandcost.

Thiscargocapacitylimitation,distancefromtheport,sizeanddepthoftheportandlake,andrestrictions

oncarryingoilsandchemicalsonfreshwater,makesitimportantthatthecentralcorridorisplannedas

analternativetothenortherncorridorwhichshouldbetakenasaprimaryroute.

FortheMalaba-KampalaSGR,upto40trainscanbeoperatedinadaytransporting8460containers.If

suchamountofCargowasgoingtobetransportedonthelake,assumingthatamassiveoffivewagon

ferriesarepurchased,wewouldrequire40daystoevacuatecargoofonetrain.Thismeansthattheroute

notbeviable.Thiscoupledwiththefactthatoilproductscannotbetransportedonfreshwatermakethe

DarEsSalaamMwanzaKampalaRoutecanonlybeaminoralternativetotheMombasa-KampalaRoute

whichshouldbelookedatasthebarkbornoftherailwaynetworktothesea.

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InordertoappreciatethesimilaritiesandthedifferencesoftheproposedStandardGaugeRailwaysbeing

built inEthiopia,Kenya,UgandaandTanzania,wehaveinatabularformoutlinedthekeyelementsof

eachcountry’sproposedsystem.Therearegeneralissuestonoteinclude:

1. TheMinistryofWorksandTransportcarriedoutastudyconductedbyaninternationalGerman

consultantGauffIngenieurewhoprovidedthepreliminaryEngineeringandfeasibilitystudyfor

theMalaba-KampalaSGRbasedonAREMA(AmericanRailwayEngineeringandMaintenanceof

wayAssociation)standards.TheconsultantestimateWITHOUTlocomotivesandrollingstockwas

USD2.4billionforanelectrifiedrailwaysystemandUSD2.0billionfordieselsystem.Thecontract

priceforthesameelectrifiedroutebasedontheChinesestandardswasnegotiatedtoUSD2.04

billionwithoutrollingstockandlocomotives.ThepriceofUSD2.3billionusuallyquotedincludes

locomotives,rollingstockandprovisionalsums.It’simportanttonotethatChinesestandardsare

animprovementofAREMAstandardsandaresafer,robustanddurable.Thisisexplainedfurther

in this paper aswe analyse the Dar Es SalaamMorogoro and theMalaba-Kampala proposed

systems.

2. ThecontractpriceandnegotiationsfortheEPCturnkeycontractforMalaba-KampalaSGRwas

basedontheEmployersrequirementsderivedfromtheGauffdesign,andNCIPagreementswhich

werethenprovidedthecontractor.Thereforeitisnottruetherewasnobasisfornegotiationsof

thiscontract.TheteambenchmarkedfromEthiopiaandKenyaandlearntfromtheirsimilarities

anddifferencesintermsoftechnicaldesignsandcontractingmodes.

3. It is important to note that the railway systems can all be Standard Gauge but designed to

differentstandardse.g.AREMAorChineseoranyotherstandards.

4. TheNorthernCorridorcountriesagreedonChinaClass1Railwaystandardtoensureaseamless

transportnetworkwhileTanzania isbasingonAREMAstandardwhileEthiopia isChinaClass2

Standard.KenyahasbuiltChinaClass1railwaysystemwhichUgandamustbuildforpurposesof

seamlessness.

5. TheAREMAstandardisnotanationalstandardbutastandardofanassociationofsomerailways

inNorthAmericawhiletheChineseStandardisanationalstandardapprovedandfollowedbythe

GovernmentofChinawhichtodayisbuildingmorelengthsofrailwaysinChinathananyother

countryintheworld.Moreresearchanddevelopmenthasbeendoneonthesestandardsinthe

last30yearsbecauseoftheheavyinvestmentintherailwaybytheChineseGovernment.

6. TheChineseStandardswereengineeredfromAREMAandotherstandardsandaremuchsafer,

robust, and durable. As illustrated later in this paper, the formation width of the Chinese

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standardsis7.7Metrescomparedto6.6MetresofAREMA,theminimumheightofembankment

is 2.5Metres high for Chinese standards while AREMA is 0.64Metres. The requirements for

protectionoftheembankmentsinChineseisstrictlybyconcretehellingbonestructureandstone

masonryandeventheconstructionoftheembankmentsandthesoiltreatmentmechanismsare

more stringent with the Chinese standard than AREMA. This is simply because the Chinese

standardtargetslowoperationandmaintenancecoststhanAREMAoverthelifeoftheproject.

Overall,thelifecycle-costsoftheChinesestandardislowerthanrailwaysbuilttoAREMA.

7. Therailwaysinthefourcountriesaredominantlyfreightbutwillhavepassengerservices.Allthe

majordesignparametersarebasedonfreightrailwaysystem.Passengertrainscanmoveonthese

railwaysatafasterspeedcomparedtofreighttrainsbecausetheyareshorterandlighterwhile

thefreighttrainsarelongerandheavier.Itisimportanttodifferentiatetheattainablespeedsof

passengerandfreighttrainswhenanalyzingthecapabilitiesoftherailwaysystems.Thereforethe

speedofpassengertrainsislargelyinconsequentialtothedesignparametersandthereforethe

changeinthespeedofthepassengertrainswillnotaffectthecostofdevelopmentoftherailway.

8. It’simportanttonotethatinrailwaydevelopment,thehighestcostisinbridges,followedbythe

earthworks(embankment),followedbytruck,stationselectrification,signalingetc.Forexample,

onMalaba-Kampala,35%oftherouteisinbridges,25%isinearthworksand10%intrack,10%

stations,5%electrification,5%signalingand10%others.Thebridgesandearthworksarearesult

of hydrology (Rivers, swamps, and amount of rainfall), terrain and geology of the respective

routes. These parameters vary significantly among the various project sites in the different

countries.EvenonroadprojectsinUganda,variancesinprojectcostscanbeseeninwetandhilly

areaslikeKanungu,Kisoro,Kabaale,KapchorwaandMbale,comparedtotheflatareasinTeso

andKaromojaregion.

9. StrictlyfromprofessionalEngineeringperspective,thecostofacivilengineeringstructureisbuilt

up using the engineers build up cost estimate method whereby the cost of various inputs,

(material, labour, technology, equipment) and the quantities are computed to come upwith

engineer’s estimates. The cost comparison should be made on this basis. From the limited

informationobtainedfromtherespectivecountries,ananalysisonthekeyparametersandcosts

hasbeendonebetweenthevariousprojectsinthedifferentcountries.Agooddetailedanalysis

can only be done using detailed designs and understanding the environmental and

macroeconomicparametersofeachcountry.

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Table 3: Comparison of Major Characteristics of the Malaba-Kampala and Mombasa-Nairobi SGR

Projects

Item Uganda Kenya

RouteLength 273KM 472KM

Tracklength 338KM 609KM

Standard ChinaClass1 ChinaClass1

System SGR SGR

Traction Electric Diesel

welding Continuous Jointed

Curvatures 1200/800 1200/800

Gradient 1.2% 1.2%

TrailingLoad 4000/5000metrictonne 4000/5000metrictonne

StructureGauge DoubleStack DoubleStack

Signaling FullyAutomatic FullyAutomatic

PercentageofBridgesalong

theroute

8.8%oftheroute 5.9%oftheroute

SuperBridge 1KMBridgeoverriverNile None

CostperrouteKm(excluding

locomotives)

7.32m/Km 7.288M/Km

Total costs excluding

locomotives

USD2.04Billion USD3.44Billion

Note:

a) GiventhattheUgandanSystemiselectric(atadditionalcostof0.54m/km),withamajorsuper

bridgeovertheNile,andwith53KMinaswamp.Malaba-KampalaSGRcostiscomparabletothe

Mombasa-NairobiSGRsectioninKenya.ItisimportanttonotethatthecostinKenyaincludesthe

developmentsatMombasaportofconnectingalltheberths,anddredgingamongothers.

b) Uganda deliberately took a decision to invest in an electric system due to the lower

operationandmaintenancerequirements(atleast40%)comparedtothedieselsystem.

Thiswill significantly reduce theproject life timecost.A report signedbyUgandaand

Kenyaattestingtothisisavailable.

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c) Todemonstratetheimpactofterrainonthecost,istolookattheNaivasha-Kisumusectionthat

passes through the rift valley and for 262KM, the cost is estimated at USD 3.6bn roughly

translatingintoUSD13.7Mperroute-KM.Inthissection,majorbridgeswillberequiredduetothe

uniqueterrain.

Table 4: Comparison of Major Characteristics of the Malaba-Kampala and Addis Ababa –

DjiboutiSGRProjects

Item Uganda Ethiopia

RouteLength 273KM 656KM

Tracklength 338KM 765KM

Standard ChinaClass1 ChinaClass2

System SGR SGR

Traction Electric Electric

Tonnageperyear Designedfor20-35mtonnesperyear Designedfor10-20mtonnesperyear

welding Continuous Jointedevery300metres

Curvatures 1200/800mradius 800/600mradius

Gradient 1.2% 1.85%-2.65%

TrailingLoad 4000/5000tonnes 3500/4000tonnes

LevelCrossings Nolevelcrossings SeveralLevelcrossings

StructureGauge DoubleStackcontainersystem SingleStackcontainersystem

Signaling FullyAutomatic Semi-automatic

PercentageofBridges 8.8%oftheroute 3%oftheroute

SuperBridge 1KMBridgeoverriverNile Maximumbridge155metres

EarthFill 51,620 m3/KM (365% higher than

Ethiopia)

11,110m3/KM

Soilcut 30,510 m3/KM (116% higher than

Ethiopia)

26,210m3/KM

HigherEmbankments 3634 m3/KM (185% higher than

Ethiopia)

1,961m3/KM

Geo-synthetics 19,803 m2/KM (966% higher than

Ethiopiaduetoswamps)

2,050m2/KM

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Rockfill 19,640 m3/KM (161% higher than

Ethiopia)

12,210m3/KM

Costofcement USD180/tonne USD125/tonne

Costofsteel USD680/tonne USD480/tonne

CostofDiesel USD0.76/Litre USD0.62/Litre

Royalties on materials

andbuyingoutlicenses

Land,royaltiesandlicenses Landonly

Distancefromthecoast 1,170KM 350KM

Costoffinancing 85%borrowed/15%domestic 55%borrowed/45%domestic

Cost per route Km

(excludinglocomotives)

USD7.32m/KM USD5.213M/KM

Total costs excluding

locomotives

USD2Billion USD3.42Billion

Note:

a) The Ethiopian system is designed for much lower tonnage and therefore would require

additionallinesinthenearfutureofthefreightincreasesdrastically.

b) Therearemajordifferencesasillustratedaboveintheterrain,topographyandhydrologyof

the twoproject sites thus resulting in higher amounts of rock fill, soil cut, embankments,

bridges,geo-syntheticsthataremajorcostcentresofrailwaydevelopment.

c) TheClassIIsystemlookscheaperatinvestmentstagebutwillbemoreexpensiveinoperation

andmaintenance.Becauseoftheconstructionstandardrequirement.

d) It is important for railways designed for 100 years to look at life cycle costs rather than

investmentcosts.

e) FortheUgandaprojectoneofthemajorcostcentresisthebridgeovertheRiverNilewhich

is1KMlongwhereasinEthiopiathebridgeoverAwashissignificantlynarrow.

f) ThedesignoftheEthiopianroutewaslimitedbythecapacityofDjiboutiPort

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Table5:ComparisonofMajorCharacteristicsoftheofMalaba-KampalaSGRwiththeDarEsSalaam-

MorogoroSGRProjects

Item Uganda Tanzania

RouteLength 273KM 205KM

Tracklength 338KM 300KM

Contractingmode** EPCTurnkey(Systemapproach)** DesignandBuild(Elementapproach)*

Standard ChinaClass1 AREMA

System SGR SGR

Traction Electric Electric

Welding Continuous Continuous

Curvatures 1200/800mR 1000mR

Gradient 1.2% 1.8%/2%

LevelCrossings Nolevelcrossings NoLevelcrossings

StructureGauge DoubleStackcontainersystem SingleStackcontainersystem

Signaling FullyAutomated Fullyautomated

PercentageofBridges 8.8%oftheroute 1.8%oftheroute

SuperBridge 1KMBridgeoverriverNile SmallbridgeoverRiverRuvu

Swamps 53KM Nomajorswamp

Formationwidth 7.7metres 6.6metres

Minimum embankment

height

2.5metres 0.64metres

Cost of cement (Normal

grade)

USD180/tonne USD110/tonne

Costofsteel USD680/tonne USD680/tonne

Transportationcapacity 20-35milliontonnesperannum 18milliontonnesperannum

Royalties on materials

andbuyingoutlicenses

Land,royaltiesandlicenses Onlypayforland

Distancefromthecoast 1,170KM 100KM

Costoffinancing 85%borrowed/15%domestic 50%borrowed/50%domestic

Cost per route Km

(excludinglocomotives)

USD7.3m/KM USD5M/KM

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Total costs excluding

locomotives

USD2.04Billion USD1.029Billion

As it canbe seen, themajordifferences in the standard as Tanzaniaopted forAREMAand theNCIP

countries including Uganda opted for Chinese standards. From the information obtained and

understandingoftheDarEsSalaamMorogororoute,therearemajordifferencesinthehydrology,(rivers,

swampsandtheamountofrainfall),geology,andtopography.Thepercentageofbridgesforthedifferent

projectsandgradientsvarygreatly.

ThemajordifferencesbetweentheChinesestandardandtheAREMAstandardare:

a) The formation width (top width of embankment) is 7.7 meters for Chinese standards while

AREMAis6.6meters.Seedetailsinattachment.Seeillustrationbelow:

b) Theheight,designandconstructionof theembankmentwhich is limitedtoaminimumof2.5

metershighforChinesestandardand0.64metersforAREMA.Thesehighembankmentsinthe

Chinesestandardsrequireslopeprotection.

c) The Chinese classification requires the herringbone concrete structure for protection of

embankments and concretemasonry for higher embankmentsof 6meterswhile this is not a

requirementfortheAREMAstandardsrequireonlybenchingandgrassing.Seeillustrationbelow:

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d) The safety factor in the concrete structures is higher in Chinese standards than the AREMA

standards.

e) Theutilisationofengineeringmaterialsespeciallythegeo-synthetics(geogridandgeotextile)for

treatmentofsoftground,thebackfillingmaterialandsoftgroundtreatmentsaredifferentinboth

ChineseandAREMAstandards.Thegeneraldesignandconstructionstandarddifferencesinthe

twostandardswouldthereforemakearailwaydesignedandconstructedtoChinesestandards

moreexpensivethantheonedesignedandconstructedtoAREMAstandards.However, this is

onlylookingatinvestmentcostandnotlifecyclecostswhicharemuchlowerinthecaseofthe

Chinesestandardsduetoloweroperationsandmaintenancerequirementsasexplainedearlier.

f) NeverthelessforUganda,theEngineeringcostestimateprovidedbyGauffIngenieurewhichwas

basedonAREMAstandards,ishigherthanthenegotiatedcontractpriceofMalaba-KampalaSGR

bsasedontheChinesestandard.Thiswasduetometiculousnegotiationsthatwerecarriedout.

g) ThereisnosuperbridgealongtheroutebutonUgandaroutethereisa1KMbridgeovertheRiver

Nile.

h) TheDarEsSalaam-Morogorocontractingmodeisdesign-and-build,wherebythecontractonly

stipulatesthedevelopmentofinfrastructurewhileinUgandaitisEPC/Turnkeymodewhichdoes

notonlylookattheinfrastructurebutalsoequippingitforoperationswithlocomotivesandrolling

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stock.Thedesign-and-buildplacesmajorriskstotheemployerincaseanydesigninadequacies

andor constructiondefects affect theoperations and theperformanceof the trains,while in

EPC/Turnkey,thecontractortakesallrisksassociatedwiththeconstructionandtestingthetrain

systemoperations.

3.0 CONLUSION

Fromtheanalysisabove,itisimportanttonotthefollowing:

• ThatboththeNorthernandthecentralcorridorareimportantforthelandlockedeastAfrican

countriesbutthenortherncorridorisamoreviablerouteforUgandaasithasahigherpotential

tospurgrowthinthecountry.

• That the construction cost of railways majorly depends on the unique characteristics of the

specificprojectasdeterminedbythedesignstandard,thegeology,terrainandhydrologyofthe

projectsite.