Tanzania is considering alternative funding options for its vital standard gauge railway (SGR) project due to financial troubles faced by the main contractor, Turkish firm Yapi Merkezi. The SGR project, comprising 2,100 km of rail, is crucial for the country’s role as a key trade corridor for East and Central Africa. Finance ministers from Tanzania and Zanzibar have been seeking support from various sources.
Tanzania’s Finance Minister Mwigulu Nchemba embarked on a European tour, where he secured tentative pledges from Spain and Sweden to contribute to the SGR project. Zanzibar Finance Minister Saada Mkuya also obtained a commitment from the African Development Bank (AfDB) to provide over $3 billion for the project.
The concerns over the SGR’s fate arose from financial troubles faced by Yapi Merkezi, which was responsible for Lots 1, 2 and 3 of the project. While Lots 1 and 2 are nearly complete, Lot 3 had reached 67 percent completion when the financial issues arose.
Tanzania sees the SGR as vital for transit trade ties with neighboring countries using the Central Corridor. The project’s estimated total cost upon completion is $10.4 billion.
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Finance Minister Nchemba assured that the project was progressing well, with the first two phases nearly complete. Test runs for the Dar-Morogoro-Makutupora stretch are scheduled for December. Efforts to secure funding for Lots 3 and 4, covering 501 km from Makutupora to the Isaka dry port, are also underway.
In addition to AfDB’s pledge, Spain has expressed support for the project, and 12 Spanish firms have been enlisted to provide various services. The project is gaining international attention, as it plays a significant role in enhancing regional connectivity and trade.
