Tanzania-Rwanda railway to halve transport costs

[John Ashworth]

Tanzania-Rwanda railway to halve transport costs

Reuters
Fri Apr 3, 2009 5:59pm GMT

* Tanzania-Rwanda railway to halve transport costs

* Project due to be completed in 2014

By Hereward Holland

KIGALI, April 3 (Reuters) - A $4.6 billion railway project linking the Tanzanian port of Dar es Salaam with Rwanda and Burundi will halve transport costs to a region cursed with the highest import costs in Africa, Rwanda said on Friday.

Linda Bihire, Rwandan Minister of Infrastructure, said the railway, scheduled to be ready in 2014, will improve trade and accelerate economic development in the East African Community.

"By reducing (transport costs) we will promote investment and increase (gross domestic product)," Bihire told Reuters in an interview.

According to Bihire, freight trains will take no more than 12 hours to complete the 1,400 km (875 mile) journey from the coast -- considerably quicker than the two-week truck journey at present.

"If you load something in the port in the morning by the evening you will have it in Kigali," she said. "It will make a tremendous change to the economies of our people and doing business here."

At the moment, transport accounts for 40 percent of the cost of imported goods. The railway should cut that to a fifth.

A preliminary study by German consulting firm DB International estimated a standard gauge track linking Isaka in central Tanzania to Kigali and Bujumbura will cost $3.5 billion, with a further $1.1 billion required to rehabilitate the existing small gauge line from Dar es Salaam-Isaka line.

Bihire said it was also imperative to upgrade the ageing port at Dar es Salaam to handle the rail traffic.

The railway will be funded though public-private partnership, Bihire said, with interest already shown by mining companies who would benefit massively from the railway.

As well as exporting minerals mined in situ, Rwanda and Burundi are important trade routes for ores such as tin, tungsten and gold from neighbouring Democratic Republic of Congo.

Bihire said the return on investment would be worth $45 billion in 30 years.

An ongoing study by Berlington Northern Santa Fe Railway estimates the new track would cost 30 percent less by conforming to US railway standards, rather than tough European standards employed by DB International.

The dilapidated east African rail network in Tanzania, Kenya and Uganda remains unaltered since the countries gained independence from Britain almost half a century ago.

Construction of the new line, which should begin in 2011, represents the physical manifestation of a budding economic alliance in the region, drawing the two former Belgian colonies into the Anglophone East African Community.

Rwanda has adopted English as its language of instruction in schools and is seeking membership in the Commonwealth.

Kenya and Uganda are also planning to upgrade the line from Mombasa port to the countries' capitals Nairobi and Kampala.

© Thomson Reuters 2009