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Uganda Cancels Chinese Rail Deal After 8-Year Financing Lag

by Cobus van Staden
The proposed 273 kilometer Standard Gauge Railway route that extends from the Ugandan capital Kampala to Kenyan border town of Malaba.

The government of Uganda announced that it canceled a 2015 contract with China Harbor Engineering Co. (CHEC) to build a rail line linking the capital of Kampala and the Kenyan border. This follows an eight-year lag as the contractor failed to get Chinese policy bank funding for the $2.3 billion project.

Uganda has now signed an MoU with Yapi Merkezi, a contractor from Türkiye, and is reportedly considering a syndicated loan to finance the 273 km project. If this comes with a shift from the concessional rates usually charged for Chinese policy bank loans to commercial rates, it could have significant debt implications.

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