Tanzania awards $9 bln rail projects to Chinese companies - CNBC Africa

Tanzania awards $9 bln rail projects to Chinese companies

East Africa

by Reuters 0

Tanzania awards $9 bln rail projects to Chinese companies. PHOTOS: blogs.agu.org

Tanzania has awarded contracts to build new railway lines worth about nine billion US dollars to Chinese firms, its transport minister said, expanding Beijing’s presence in East Africa's second-biggest economy.

Transport Minister Samuel Sitta told parliament on Saturday a Chinese consortium had been awarded a contract to build a 2,561 km (1,536 miles) standard gauge railway connecting Dar es Salaam port to land-locked neighbours at a cost of 7.6 billion US dollars.

(READ MORE: Tanzania, China sign East Africa investment deals worth $1.7 billion)

“A consortium of Chinese railway companies led by China Railway Materials (CRM) has been picked to help us build the railway line,” he said.

The consortium will provide 10 percent of the funding for the project while financial adviser Rothschild is finalising procedures for financing of the project through banks, Sitta said. 

The minister said construction of the railway line was expected to start in June.   

He said Tanzania had signed a framework agreement with another Chinese company, China Railway No.2 Engineering Group Co. Ltd., to build a railway line linking coal and iron ore mine projects, also under development by a Chinese group, to the southern port of Mtwara near big offshore natural gas discoveries.    

The 1,000 km standard gauge railway line is expected to cost at least 1.4 billion US dollars, according to the Tanzanian government estimates.   

Tanzania said in March it planned to spend 14.2 billion US dollars to construct a new rail network in the next five years financed with commercial loans, as the country aims to become a regional transport hub.   

Tanzania, like its neighbour Kenya, wants to profit from its long coastline and upgrade existing railways and roads to serve growing economies in the land-locked heart of Africa.   

(READ MORE: Is Africa selling out for Chinese investment?)

Oil discoveries in Kenya and Uganda and gas finds in Tanzania have turned East Africa into an exploration hotspot for oil firms but transport infrastructure in those countries has suffered from decades of under-investment.   

Tanzania last year signed an agreement with China Merchant Holding International (CMHI) to build a new mega port and economic zone at Bagamoyo expected to cost at least $10 billion.    China is also financing a 1.2 billion US dollars, 532 km (330 mile) natural gas pipeline in Tanzania.