Tanzania Plans to Invest $14.2 Billion in New Rail Lines

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Oil discoveries in Kenya and Uganda and gas discoveries in Tanzania have transformed East Africa into an exploration hotspot for energy companies, but progress has been hampered by inadequate transportation infrastructure.

Facing this development challenge, Tanzania plans to invest $14.2 billion in the construction of a new rail network during the next five years. The Department of Transportation said the project will be financed with commercial loans.

Tanzania and its northern neighbor, Kenya, are aiming to profit from their long Indian Ocean coastlines by upgrading the rail and road networks to serve their growing economies and the landlocked countries of Central Africa.

Samuel Sitta, Tanzania's transportation minister, said the railway network would meet the huge demand for the transportation of cargo from neighboring countries, including Democratic Republic of Congo (DRC), Rwanda, Burundi and Uganda, in addition to his country's domestic needs.

The projects include a 2,561-kilometer, standard-gauge railway connecting the port at the county's commercial capital, Dar es Salaam, to its neighbors, with an investment of $7.6 billion.

Kenya is currently building a standard-gauge rail line with Chinese backing to run from the port of Mombasa to the Ugandan border, which will cut the cost of intra-regional trade.

In Tanzania, two additional lines, with an investment of $6.6 billion, will connect Dar es Salaam to the coal, iron ore and soda ash mining areas in the south to the northern regions of the country.

Sitta said the projects would be funded by commercial loans from a consortium of banks under a 20-year repayment period. The participating banks were not named. The government has appointed Rothschild as the financial adviser to help secure the funding.

For related information, see January 7, 2015, article - Dearth of Infrastructure Investment Challenges Energy Resource Development in Mozambique, Tanzania.

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