The initiative was designed to bolster the value chains of projects in northern Uganda and stimulate industrialization by facilitating cost-effective transportation of raw materials and finished products in the region.
However, the completion of the 382km Tororo-Gulu railway line rehabilitation project has been in a state of uncertainty, marked by persistent setbacks and financial losses since its initiation.
The gloomy state of the project is captured clearly in the auditor general’s annual report for the financial year ending June 2023, presented by the auditor general, John Muwanga. The report notes that the Uganda Railways Corporation suffered substantial losses due to theft.
“The corporation also incurred a loss due to theft of materials/equipment on rehabilitation of Tororo-Gulu railway… This is an indication of weaknesses in operating, profitability and its ability to sustain provision of service,” the report noted.
These losses have been building up since the project was started in 2020. The Tororo-Gulu line is needed to open up northern Uganda to more trade opportunities, and it is expected to lower the cost of transport for goods headed to neighbouring countries such as South Sudan.
When the rehabilitation commenced, the European Union (EU) provided funding to the tune of Euros 21.5 million, complemented by the Ugandan government’s counterpart funding of Euros 26.07 million.
However, the contract with the railway project contractor, Sogea Satom, was terminated. This decision arose from Ugandan government’s inability to fulfill its co-funding commitments, resulting from delayed payments. Subsequent to this development, the European Union took the decision to terminate its grant for the railway project in Uganda.
Consequently, the Ugandan government faced termination damages equivalent to 10 per cent, totalling Shs 16 billion, as highlighted in the auditor general’s report for the financial year 2022. It is noteworthy that at the time of contract termination, the contractor had completed only 15 per cent of the rehabilitation project.
Subsequently, the government pursued another contractor, assuming sole funding responsibility for the railway project. The ministry of Works and Transport, on behalf of the government, allocated Shs. 199.9 billion for the Tororo-Gulu railway rehabilitation.
Uganda Railways Corporation entered into a contract with China Road and Bridge Corporation (CRBC) to undertake the rehabilitation of the Tororo to Gulu section of the railway line. This project was officially launched in August 2023 by the minister for Works and Transport, General Katumba Wamala.
Over the last two years, the auditor general’s report revealed that the Uganda Railways Corporation had experienced substantial losses, witnessing a 9.2 per cent increase compared to the previous year’s loss of Shs 32.22 billion, despite a revenue surge of 13.83 per cent.
The auditor general attributed these challenges to weaknesses in operations, profitability, and the corporation’s ability to maintain services. The Uganda Railways Corporation’s spokesperson, Linonn Ssengendo, refused to comment on the auditor general’s report, stating that the team has not yet fully reviewed the document. He stated they need to understand the report before responding.
“We have to first read the report and understand it and then we shall be able to respond,” he said.
On the challenges faced by the corporation involving theft of materials and vandalism, Ssengendo mentioned that the corporation is actively addressing them by collaborating with Uganda People’s Defence Forces and other security agencies for comprehensive surveillance.
Additionally, he highlighted efforts to involve local leaders in safeguarding railway lines on behalf of URC to curb vandalism. The auditor general recommended that the accounting officer formulate strategies to bolster the corporation’s revenue-generating capabilities.
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