(Corrects official’s first name in 5th paragraph to Perez (not Peres)
KAMPALA (Reuters) – Uganda will ask Turkish firm Yapi Merkezi to secure financing for a $2.2 billion rail link to the Kenyan port of Mombasa and is eyeing export credit agencies as potential sources, a senior official told Reuters.
The Turkish construction company had previously confirmed a memorandum of understanding was signed with the Ugandan government for a potential deal to construct a 273 km (170 miles) railway project linking the capital Kampala to Kenya’s own rail to access the Indian Ocean seaport.
Yapi Merkezi did not immediately respond to a request for comment on Wednesday.
Details of some of the ongoing negotiations for a potential binding contract, however, have not been previously disclosed.
“We want Yapi to carry the burden of helping the government to procure financing from lenders,” Perez Wamburu, who heads the standard gauge railway project in the Ministry of Works and Transport, told Reuters.
“We want the agreement we sign with them to include that component in addition to engineering and construction … we want them to approach export credit agencies some of which have already shown interest.”
Uganda, a landlocked nation of 45 million in east Africa, is banking on the railway to boost the speed and lower the cost of transporting its exports. It currently relies on costly and slow road links and a century-old narrow gauge rail line built by Britain to ship its exports.
Uganda started negotiations with Yapi Merkezi in December after the country terminated a 2015 deal with Chinese firm China Harbour and Engineering Company Ltd (CHEC) for the project.
Ugandan officials were frustrated with the CHEC agreement after China failed to provide the agreed financing.
Wamburu said Uganda has already given Yapi Merkezi tender papers and hoped to finish negotiations and sign a binding contract so construction can begin in about seven months.
He expected work with Yapi Merkezi to move faster.
“Yapi is not starting on virgin land, what is happening is merely reviewing of (the) project,” he said.
(Reporting by Elias Biryabarema; Editing by Vin Shahrestani and Alexander Smith)
