Infrastructure
Tanzania Turns to Sweden, Denmark for Sh146bn SGR Loan
Money will fund the construction of a 550km railway between Dar es Salaam and Matukupora.
The government of Tanzania has inked a Sh146 billion ($1.46 billion) loan treaty with the Standard Chartered Bank Tanzania to finance the construction of a 550 km standard gauge railway linking Dar es Salaam to Matukupora in central Tanzania.
Standard Chartered coordinated the facility agreement that is billed as the largest foreign exchange financing raised by Tanzania to date.
“Standard Chartered Tanzania acted as global co-ordinator, book-runner, and mandated lead arranger on the facility agreement,” the Finance ministry said on Thursday, adding that the bulk of the funds would come from Sweden’s and Denmark’s export credit agencies.
The loan has a 20-year tenure, but details on its interest rate are still undisclosed.
The deal comes as a great relief to the Tanzanian government, which has been struggling to obtain external funding for the project. The State had resorted to spending cash from its coffers to build the railway which is likely to cost Sh760 billion ($7.6 billion).
According to the Tanzania Railways Corporation, Sh120 billion ($1.2 billion) has been spent on the first two phases, currently being undertaken by Turkish firm Yapi Merkezi Insaat VE Sanayi As, in partnership with Mota-Engil Engenharia e Construcao Africa SA.
In February 2017, the two companies were awarded a Sh120 billion ($1.2 billion) contract to build phases one and two of the SGR from Dar es Salaam to Morogoro.
Work on phase one is now 72 per cent complete.
Tanzania State-run railway firm Reli Assets Holding Company said Yapi Merkezi fulfilled all the financial and technical requirements for the second phase of the project – which received 15 bids from international contractors.
RELATED: Tanzania High-Speed Railway a Boon for Turkish Engineers
Yapi Merkezi, which is ranked 78th on the list of the world’s largest contractors, is a key player in the mega infrastructure development sector and has already built railways and light-rail systems in Morocco, Tanzania, Senegal, Ethiopia and Algeria.
The company is in charge of design works, infrastructure erection, track laying, signalization, communication systems, spare parts provision, rail electrification and personnel training for the Tanzania standard gauge railway project.
Tanzania had in 2017 said it planned to spend Sh1.42 trillion ($14.2 billion) over five years to build 2,561 km of standard gauge railway linking Dar es Salaam with Burundi, Rwanda, and the Democratic Republic of Congo.
Initially, the State planned to obtain financing from China but this failed to happen after it contracted non-Chinese contractors to undertake the first two phases of the project.
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