How did the Uganda Railway Corporation (URC) get started?
MR. C. KATEEBA: The history of URC is synonymous with the history of Uganda. You see, for the British to establish their hold on Uganda, they thought it necessary to create a reliable transport system to bring in goods necessary for the country, and most importantly, to extract raw materials for their home industries. This was the main justification for the British to take over Uganda. There was a debate in Britain about whether it was necessary to spend so much money (risking personnel and other resources) to take over this remote territory at the center of Africa.
The British anchored the construction of the railway and the capture of Uganda on two things. First, the abolition of the slave trade, which was the main means of transporting goods out of Uganda and the surrounding territories.
Back on the day, they would take gold and other minerals using human labor. Eventually, these people were sold as slaves. To put an end to this, the British thought it was necessary to construct a railway to the heart of Africa. They also thought that if they had an efficient means of transport, they could introduce cash crops into the country for re-exportation to the UK (to serve the markets and industries in Europe to make them more competitive, particularly in terms of competing with the emerging American market).
Construction of the Uganda Railway started in 1896 at Mombasa, with the purpose of going all the way to Lake Victoria and further on to Uganda. It reached the shores of Lake Victoria in 1901, at Port Florence (now called Kisumu). During the course of constructing the railway, the British discovered the good climate and fertile soil in Kenya. This led them to establish the Kenya colony, and set up its headquarters in Nairobi (which discovery was purely accidental). You see, they had to rest in Nairobi as they waited to surmount the Rift Valley. They needed to reinforce the technology that they had to build the railway and cross the Rift Valley. As they rested in Nairobi, they planted vegetables and had a very good harvest. I am told that the women, especially, loved the weather in Nairobi.
The boundary for Uganda was shifted westwards to create the British Kenyan highland colonies. The railway system was managed as Uganda Railway (UR) until it waschanged to Kenya-Uganda Railways (KUR). Later on, it became East Africa Railways & Harbors (EARH). Eventually, it was known as East African Railways (EAR), and it remained so until 1977. The East African Community (EAC) from 1964, until the EAC was abolished in 1977, managed it. Each of the member countries (i.e., Kenya, Uganda and Tanzania) formed their own national railway corporations.
1977 saw the birth of the Uganda Railways Corporation (URC). It ran as a state corporation. Up to 2006, it was fully responsible for all the operations, including the construction of new lines, management, maintenance, and the like. After which, it was concessioned to Rift Valley Railways (RVR). RVR continues to run the business to this day.
The concessioning of URC was done jointly with Kenya Railways (KR). RVR is the joint operator of the Ugandan and Kenyan railway concessions. The URC is run as a seamless operation between Mombasa and Kampala. The network is about 1,230 kilometers. The Kenyan network is about 3,300 kilometers.
You mentioned that RVR still runs the railway to this day.
MR. E. IYAMULEMYE: Yes, unfortunately, in 2006, the entire 1,250 kilometers could not be taken over by RVR. Most of it had been closed prior to the concession commencement date. Some of the reasons for closure were technical, and some were business reasons. What they took over for operations upon commencement was a paltry 337 kilometers. However, recently (as of October last year), they added 328 km. That is what is currently being operated on by RVR.
MR. C. KATEEBA: The rest of the network is still in our hands.
Kindly tell us about your current programs/projects. We understand that URC's perspective mirrors that of the EAC.
MR. C. KATEEBA: It goes beyond that, because we are working with countries like South Sudan (which, as you know, is not a member of the EAC yet).
You collaborate with the different governments to boost this project.
MR. C. KATEEBA: In terms of the regulatory position, about four countries (namely, Kenya, Uganda, Rwanda, and South Sudan) have signed a cooperation agreement. The agreement lays down all the rules and procedures of our cooperation. Tanzania decided not to be part of this. As such, we have avoided the use of the term “EAC”, and instead used Northern Corridor (NC). However, we remain hopeful that Tanzania will join us soon.
In your opinion, what was the reason behind Tanzania's decision not to join?
MR. C. KATEEBA: The main reason why the Tanzanians did not join the concession was that they thought they needed to do more work on their railway infrastructure. Uganda and Tanzania were looking to concessioning vertically. In other words, the infrastructure, operations and maintenance are all going to be concessioned to one party. The Tanzanians thought that would risk their infrastructure. It has been such that even the concession they entered into in Tanzania removed the major rehabilitation and construction of infrastructure from the concession. They thought that they could not stake funds into private hands if they were going to handle major infrastructure work.
Is it going to be difficult to turn Uganda into the logistics hub of the region without those participants?
MR. C. KATEEBA: Technically, it would be, but remember that we currently have meter gauge (MG) operations, which includes operations on Lake Victoria to Dar es Salaam via Mwanza. In fact, prior to the concession, we were running trains from Durban to Kampala. There was a transhipment center at Kidatu in Tanzania necessitated by the different gauge in Southern/Central Africa (Cape Gauge, 1067mm).
In terms of social welfare, GDP growth, and the like, what will this project mean for Uganda and the NC?
MR. C. KATEEBA: The biggest value of this project is the unit transport cost (UTC) reduction for our industries and exporters. We have a lot of minerals and agricultural produce. However, much of this cannot be developed because of the expensive UTC. We are sitting at the eastern edge of the Democratic Republic of Congo (DRC) which has vast reserves of iron ore, gold, tin, nickel, copper, and many more (basically, nearly any mineral you can think of. To transport these minerals from a country that is three times the size of France with no good roads can make most investors hesitate.
We think that we can address this issue if we bring the Standard Gauge Railway (SGR) to Uganda and connect it to DRC's network. As you may know, the DRC already has an SGR in one part of the country. They have three gauge systems, one of which is the MG. If we could connect to the Congo River at Kisangani, then we would be able to connect to the MG that connects the DRC to the Atlantic Ocean. That is really our long-term goal. In the meantime, we have found oil in Western Uganda, Southern Sudan, and Northern Kenya. The SGR is going to join these oil production areas, from the Lake Albert area through Gulu to Southern Sudan. That is the immediate one, but we also want to unlock our mineral wealth in Karamoja (in North-Eastern Uganda).
The project is also meant to go through Rwanda and South Kivu in North-Eastern DRC, moving all the way to Mombasa. Right now, all the transportation is done by land and it is very expensive for the transporter and the road infrastructure.
More than an infrastructure project, we are looking at the NC SGR as a special corridor development project. In making our designs, we are deliberately taking the railway line through the most productive areas of the region. By doing that, we want to stimulate growth in agriculture, mineral development and processing, and create transit-oriented development. We are going to create townships and business hubs around this railway line, and the railway companies are going to make land available for the development of business parks, entertainment and commercial centers, and micro cities.
Alongside the development of the railway, we are also looking at the strategic development of railway-run land reserves. A lot of our arable land has remained largely undeveloped because we require a reliable means of transport for input and grain outputs to attract commercial funding.
We think that the development of the SGR going through the most productive agricultural areas of the region should tap into Africa's potential in agriculture (especially extensive agricultural production).
Your SGR project looks very promising. What are the advantages of using this kind of railway?
MR. C. KATEEBA: Because the SGR is wider, it can carry bigger loads and move faster. It is also the most widely used railway gauge. This makes it easier in terms of the cost and availability of railway equipment. We will pay less for SGR because the market is much bigger.
MR. E. IYAMULEMYE: In terms of our project, we are not just looking to change the railway gauge. We also want to improve efficiency. We are building a high-capacity, high-efficiency railway system with speeds of 120 kph for passengers and 80 kph for freight. The new railway will have an axle loading of 25 tons per axle enabling the carrying of heavier loads such as minerals or double-stacked containers.
MR. C. KATEEBA: SGR is really the name but it is much more than that. The new railway will be built to a much higher standard. First of all, the rails will be much bigger, allowing the carrying of heavier loads. Secondly, the crossing loops will be longer, allowing for longer trains. Speed and efficiency are very important. The existing MG railway has many sharp curves. The new railway, the curves will be fewer and much flatter.
Another consideration is level crossings. We are doing our best to keep theseat a bare minimum.
Why does Africa have different rail gauges?
MR. C. KATEEBA: One of the most strategic decisions that our African leaders took this century was the reation of railway networks to serve the export/import markets, further opening up Africa to the rest of the world. It also created networks that would interconnect to stimulate intra-Africa trade. You see, most of our railway systems were built as colonial avenues of transport. The main objective was to transport raw materials from the interiors to the coast, and finished goods from the coast to the interiors. Between Cairo and Cape Town, we have three gauges. When the British were building EAR, their dream was to create a Cairo to Cape Town connection. However, there was a miscommunication between the developers in London and the designers in East Africa. The designers in East Africa adopted the MG that was dominant in India, while the planners in London adopted the CG in Egypt. By the time they got together, decisions had already been taken and so we have different gauges.
We understand that this is being corrected.
MR. C. KATEEBA: For the first time, Africa is moving to correct the mistakes of the colonial era. We have SGRs being built in Senegal, Côte d’Ivoire, Ethiopia, Kenya, Uganda, and Sudan. We already have some MG/SG in West Africa. When West Africa gets the SG, you can now have a connection between the west and the east.
Where would you like to see more investments?
MR. C. KATEEBA: To be honest, we want investments in all areas. Our ideal situation would be to have a railway public-private partnership (PPP) that will involve infrastructure, operations, and maintenance.
We realize that with the current economic environment, it is very difficult to attract people who may be involved in the full development of infrastructure and operations. The government has taken the lead in starting the infrastructure construction. That is where the current focus of government participation is. However, we clearly expect to concession out the areas of operation and maintenance. The focus for attracting investors right now is in operation and maintenance.
The US continues to be a key partner of Uganda. In which areas can it increase its participation?
MR. C. KATEEBA: Right now, the American rail industry is clearly the world leader in freight railroading. It has grown considerably over the years. Likewise, the American rail industry is very strong in terms of motive power and operating systems.
The manufacture of rolling stock has clearly moved to Asia as it becomes a strong competitor in that area, but we believe that the Americans are very competitive in the manufacture of locomotives, power systems, operating systems, safety and security systems, and particularly, logistics and operations management. We think that a North American company (maybe one of the top 5 to 7 members of the Association of American Railroads) would be a very strong candidate for this regional project.
We are looking for operations that will cut across borders, from Kenya to Rwanda, and through Uganda to Southern Sudan. As you know, Ethiopia has a very ambitious SGR construction program. The government of Uganda has already settled its negotiations to connect Kenya to Ethiopia via SGR. Ethiopia is also working to connect with Southern Sudan and Sudan. We think that anyone coming on the platform from East Africa has a clear chance of running about 6,000 kilometers or more on the SGR network.
ENG. E. IYAMULEMYE: Charles is right, the Americans are really the undisputed world leaders when it comes to freight railraoding. For passenger rail, that is another story.
Do you feel that American investors are aware of these investment opportunities?
MR. C. KATEEBA: I do not think they are fully aware, that is why we are trying to reach out. We are going to make more information available on our websites. We also encourage members of the American railroad industry to visit East Africa so they can see things for themselves i.e., its existing potential, and the efforts that the government has put in place to set up the necessary infrastructure and establish the needed framework for PPP operations.
We understand that you have already been in contact with certain American companies. How is that coming along?
MR. C. KATEEBA: The concessionaire, RVR, has purchased 20 used locomotives from the National Railway Equipment Co. (NREC) in Mount Vernon, IL. These locomotives are being rehabilitated and converted from SG to MG so that they could operate on the existing MG network. Much of the cost of these locomotives had been for the conversion from a heavy SG American locomotive to a much lighter MG locomotive so that they can operate on the existing MG system.
The construction of the SGR would have made the acquisition of such a locomotive much cheaper. This means that an operator from the US who already owns the SG equipment (which is used to operate on high-capacity lines) would be at the very big advantage when it comes to operating on SGR in East Africa.
Where should investors go to know more about the projects?
MR. C. KATEEBA: The SGR is being promoted by the governments, and it is outside the current RVR concession. To take part in this project, they have to approach the governments of Kenya, Rwanda, South Sudan, and Uganda. They can come to URC and have a meeting with us so they can know what is happening.
What should investors understand about the Ugandan railway sector?
MR. C. KATEEBA: It is profitable for them to come here and invest. Apart from the attainable profit, we have freight that is coming online because of the development of oil in north-western Kenya. There is also the development of oil in the Albertine region in Uganda. There is also the oil being produced in Southern Sudan. When you talk about production requirements, some of the crude oil will be transported by rail.
We have a huge potential for mineral reserves in Karamoja, north-eastern Uganda, and Eastern DRC that can benefit from rail if you have the right efficiencies and capacity.
We believe that the production of oil in Uganda will not only attract profit to the oil industry, but will also sustain the economy. We also believe that we can expect a two-fold or three-fold growth in bulk freight over the next 10 years.
What message would you like to convey to investors?
MR. C. KATEEBA: I mentioned the strategic decision that our African leaders made earlier. I think the prospect of this should be exciting for American investors. It is much cheaper for East Africans to import goods from the east because we use West Asian and East African ports. For East Africans to import from the US, the goods have to either go through the Suez Canal or around the Cape, all the way to the East African port. This makes it very expensive. The SGR connection from the East to the West African coast should allow American exports to be accessed at a cheaper rate by Central and Eastern Africa.
I did mention that alongside the development of the railway, we are also looking at the strategic development of railway-run land reserves. To that end, we would like to invite partners to discuss that.
What title would you pick for a feature article about Ugandan railways?
MR. C. KATEEBA: URC’s slogan is currently, “Be Sure Go Rail and Save the Roads.” However, for this feature, I would pick: “Uganda - Connecting Africa” and the “Northern Corridor Standard Gauge Railway Project”.
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