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Uproar over UGX1b rent for Standard Gauge Railway

Legislators on the Committee of Physical Infrastructure in a session. (PHOTO/FILE)

KAMPALA – Legislators on the Committee of Physical Infrastructure have expressed concern over the high costs of renting office premises by Standard Gauge Railway (SGR) after it was revealed the institution is spending Shs1Bn in rent even before the construction of the railway kicks off.

The concerns are contained in the report on the ministerial policy statement by the Ministry of Works and Transport in which Parliament questioned why SGR is spending colossal sums in rent yet the entity was merged with Uganda Railway Corporation that has room to house SGR.

While tabling the report before Parliament, Committee Chairperson, Robert Ssekitoleko argued that whereas Parliament has in the past recommended that the organisational structure of the SGR secretariat be realigned and rightly placed under URC as the institution mandated overall railway projects to reduce the cost of public administration and ensure better coordination and sustainability of the rail transport sub-sector, the recommendation hasn’t been implemented.

The Committee revealed that the SGR project is incurring high costs on renting office space at the UAP Nakawa Business Park to the tune of USD69,030 approximately Shs258,475,453M per quarter yet URC has space at its premises part of which has been temporarily allocated to Uganda.

With each quarter having three months, and every financial year accounting for four quarters it means SGR is incurring Shs1,033,901,812Bn annually in rent which figure is respect to exchange rate at the time of payment.

Ssekitoleko explained: “The Committee recommends that the SGR Secretariat relocates to the URC Building upon expiry of the current tenancy agreement to rationalize costs of public administration.”

Relatedly, Parliament has also expressed concerns over delays for the implementation of the Standard Gauge Railway (SGR) with the objective of the team is to jointly develop and operate a modern, fast, reliable, efficient and high capacity regional railway transport system as a seamless single system and as a mechanism to stimulate overall economic development.

According to the plan, the SGR starts in Mombasa Port to Malaba through Nairobi, Kenya to Uganda, South Sudan, Rwanda and the Democratic Republic of Congo and in Uganda, a total of 1724km of SGR lines will be developed in a phased manner starting with the Malaba-Kampala route of 271.6Km.

The SGR team had initially put the project cost for phase one was USD 2.295bi11ion but following complaints by Parliament and President Yoweri Museveni, the cost was reviewed and re-negotiations and effectively reduced to USD120M  and the contract price is now USD2.269bii1ion excluding loca1 taxes.

While appearing before the Committee, the SGR team informed Parliament that the contract was signed in March 2019 which includes the new contract price and amended clauses and the project was in the final stages of submitting a new loan application with the revised feasibility study, contract and loan repayment plan.

However, Ssekitoleko said; “The Committee is concerned that while Kenya and Tanzania have already embarked on construction, Uganda is still lagging behind in pre-construction activities. Some of the challenges that have beleaguered project implementation include; land acquisition and financing challenges, and the uncertainty about when Kenya will develop the Kisumu-Malaba section.”

Parliament has called on Government to allocate the project an additional funding of Shs56Bn for compensation of Project Affected Persons along the Tororo-Malaba section in the FY2019/2020 to facilitate acquisition of right of way for the project and finalise of higher acquisition costs that are likely to accrue from PAPs seeking re-valuation of their properties given that the value of land appreciates with every passing year.

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