Kampala, Uganda | URN | Members of Parliament have approved a loan request worth 1.39 Trillion Shillings for the refurbishment of the Kampala-Malaba Meter Gauge Railway Project.
The approval in a plenary sitting Chaired by Speaker Rebecca Kadaga followed the approval of a report by the National Economy Committee presented by Nakaseke North MP Syda Bbumba.
The 250-kilometre Kampala-Malaba railway connects Uganda’s capital with Kenya at the Malaba border. Money for the project will be sourced from the African Development Fund- ADF which will provide 356.61 billion shillings, the African Development Bank- ADB (825.52 billion) and the Corporate Internationalization Fund of Spain (110.72 billion shillings).
Bbumba told parliament that the Kampala-Malaba project is part of the bigger proposed Meter Gauge Railway (MGR) project, which will entail rehabilitation of Kampala-Port Bell (8.3Km) and Kampala-Nalukolongo-Kyengera (12.3Km), purchase and rehabilitation of coaches, wagons and locomotives, creation of a railway training school to equip Uganda Railways Corporation (URC) Management and Staff with modern railway skills, and stock new spares for the workshop.
She says that if the Meter Gauge Railway Project (MGR) is implemented, the cost of transport by rail will improve from the current average of between US Dollars 0.09 – US Dollars 0.13 (per NTK-net tone kilometre) to US Dollars 0.05, hence reducing the cost of doing business.
However, during the debate, a section of MPs raised concern over the government’s move to borrow for an old railway, instead of the long-awaited Standard Gauge Railway project.
Odur Jonathan, the Erute South MP questioned why the project was expensive yet the government was going to procure old wagons from South Africa. He said that solving the transport problem in the country was good but it shouldn’t be used to inflate the cost.
Patrick Nsamba, the Kassanda North MP supported the loan but sought assurance on the planned Standard Gauge Railway.
Akurut Violet Adome, the Katakwi Woman MP suggested that government borrows for the implementation of the Standard Guage Railway and not the meter railway.
David Bahati, the State Minister of Finance for Planning defended the loan request saying that it is important to invest in projects that produce wealth and create growth.
He said that the Kampala-Malaba Meter Gauge Railway is a regional project and that whatever the government is doing regarding railway transport is done in consultation with other East African Community (EAC) member States.
Regarding the high cost of the project, Bahati said that this was informed by a feasibility study. He added that the Standard Gauge Railway project is not abandoned and that government is carrying out negotiations with the Government of China and other lenders.
Recently, the country’s national debt hit 65.82 trillion shillings as of December 2020, a figure way above the 49 trillion debt reported in 2019.
The new loan requests by the government imply that Uganda’s debt portfolio will swell in the coming financial year 2021/2022 and that the country is moving closer to its threshold set by the International Monetary Fund at 50 percent debt-to-GDP ratio for developing countries.
The country’s nominal debt to Gross Domestic Product -GDP as of December 2020 stood at 47.2 per cent and the public debt is projected to rise to 51.9 percent of the GDP in the coming financial year 2021/2022.
In his recent interface with Parliament’s Budget Committee, Finance Minister Matia Kasaija said that the debt burden had increased because the government borrowed to finance infrastructural projects such as transport, oil and gas sectors and to also counter the shock to the economy occasioned by the COVID-19 pandemic.