OPEC Fund Appraises Shs697 Billion Loan for Uganda's SGR Project

Uganda’s ambitious Standard Gauge Railway (SGR) project is nearing a crucial financing milestone with the OPEC Fund for International Development initiating an appraisal mission. The Vienna-based fund is considering a loan of €150 million (approximately Shs696.8 billion), which would represent a major financial commitment to the infrastructure development.

This potential funding comes after the Islamic Development Bank (IsDB) greenlit a €650 million (Shs3.02 trillion) package for the SGR in June. The SGR project aims to modernize Uganda’s transport infrastructure, significantly reducing the costs and transit times for both imports and exports. Currently, freight costs average $0.14 per tonne-kilometre with transit times reaching eight-and-a-half days via the existing corridor through Mombasa. The SGR is projected to halve these costs to $0.07 per tonne-kilometre and reduce transit times to a single day, enhancing industrial competitiveness and the export pricing of key commodities.

A delegation from the OPEC Fund is in Uganda for a week-long assessment, which includes meetings with the Ministries of Finance and Works, and relevant project agencies. They will also conduct a field tour of the planned Malaba-Kampala eastern route. Kemi Afun-Ogidan, the OPEC Fund’s Senior Country Manager, stated that the mission will scrutinize engineering designs, implementation plans, disbursement schedules, and environmental safeguards before presenting recommendations to their board.

The fund is targeting board approval by November 30, 2026. If approved, this loan would be the OPEC Fund’s largest single financial contribution to Uganda since its operations began in the country in 1976. This financial backing is vital, as the Development Finance Institution (DFI) cluster, including IsDB and the OPEC Fund, is expected to cover about 25 percent of the project’s total cost, estimated at €2.7 billion (Shs12.54 trillion).

Construction activities for the SGR are already underway, with a contract awarded to Turkish firm Yapi Merkezi. While the project was officially launched in Tororo on November 21, 2024, the official construction timeline of 48 months will commence after financial close, which is targeted for January 2027. To maintain momentum, the government has issued a Limited Notice to Proceed worth €75 million (Shs348.4 billion), enabling the contractor to establish essential facilities and complete initial studies.

Source: https://www.monitor.ug/uganda/news/national/opec-fund-targets-shs697b-boost-for-sgr-project-5638092