Tanzania Signs $1.9 Billion Railway Contract With Turkish Company

The gauge width is the same spec as the standard-gauge railway that China built in neighbouring Kenya, offering the potential to extend the railway across the eastern shores of the African continent.

With seven stations between Makutupora and Tabora, Yapi Merkezi said that the railway will be the fastest in East Africa. All construction, including signalisation, telecommunication and electrification work, is slated for completion in 46 months.

There are five phases in the project, the company is nearly done constructing the first- and second-phase parts of the railway which covers 705 km and costs $3.1 billion.

Phase three will link Makutupora with Tabora, both in central Tanzania. Yapi Merkezi is also in talks with the authorities for phase four, which will run 167 km. But it lost out to a Chinese consortium for phase five last year.

Yapi Merkezi Chairman Basar Arioglu said on Tuesday: “The Tanzanian railway authorities were very satisfied with our quality, speed and meticulous work on phase one and two, so they decided to entrust phase three to Yapi Merkezi as well. We also hope to sign phase four soon as a result of ongoing negotiations.”

The planned railway will eventually connect Dar es Salaam, the commercial hub on the Indian Ocean, to the port city of Mwanza on the shores of Lake Victoria. The lake shares a border with Kenya and Uganda.

Arioglu however noted that “competing with China is very tough.” He recalled the bidding process for phase five, when a consortium of China Civil Engineering Construction and China Railway Construction beat Yapi Merkezi with $1.3 billion bid that significantly undercut the Turkish proposal.

Arioglu added that to complement the Turk Eximbank’s financial capacity, Yapi Merkezi seeks funds from development financial institutions like the African Development Bank or from such export credit agencies as Japan’s Nippon Export and Investment Insurance, which was one of the financers of phase two.

African countries now have a tendency to realise projects under the public-private partnership schemes that Turkish companies are accustomed to, Arioglu said. That the format is not preferred by China also creates advantages for Turkish companies. “We are not afraid to be an investor in those schemes,” he said.

By March, Yapi Merkezi also plans to open the world’s longest suspension bridge in Canakkale, to span the Dardannelles with Turkish and South Korean partners. This and the Bosporus tunnel are build-operate-transfer public-private partnership schemes.

Having completed 62 railway projects on three continents to span 3,800 km and carry 3.5 million people a day, Yapi Merkezi has cognate expertise in railway projects. In Africa, it has completed or has projects ongoing in Tanzania, Ethiopia, Senegal, Algeria, Morocco and Sudan.