Africa-Press – Tanzania. THE government yesterday disclosed how it saves trillions of shillings from contracts and cost negotiations at the ongoing construction of the Standard Gauge Railway (SGR) from Dar es Salaam to Mwanza, which started over four years ago.
This is the first phase of the SGR construction (Dar es Salaam to Mwanza), which will cover a distance of about 1,219 kilometers, comprising of five lots. According to the Director-General of the Tanzania Railway Corporation (TRC), Masanja Kadogosa (pictured), the government has saved 613 million US dollars (about 1.4tri/-), so far, in the ongoing construction of Lot one and two, which are Dar es Salaam-Morogoro and Morogoro-Makutupora respectively.
During the Lot One of the project, the government saved 266.4 million US dollars by last September, and in Lot Two, the government saved 347.5 million US dollars by the same period.
“The government could have paid this amount to contractors should the contracts included the clause of adjustments fees, wages, or other payments to account for the fluctuations in the costs of raw materials or labor,” Mr Kadogosa stated on Tuesday at the State House in Dar es Salaam, during a signing ceremony for the construction of the SGR Lot 3 from Makutupora in Singida to Tabora. The construction of the SGR from Makutupora to Tabora will cost 1.9 billion US dollars (about 4.4tri/-) and will be built for 46 months.
With yesterday’s signed contract, it will make the government’s total investment to reach 6.38 billion US dollars (14.73tri/-) since it started implementation in the first phase of the project. Apart from fixing the contracts not to allow costs advancements or variations, Mr Kadogosa clarified that the government considered the affordable cost of construction per kilometer.
The move, Kadogosa said, enabled the country to engage contractors to undertake the project at reasonable costs, where Tanzania pays contractors 3.39 million US dollars per kilometre, without tax. “This is the lowest cost compared to other places worldwide. We established that the average cost worldwide was 3.5 million US dollars per kilometre, tax excluded,” he argued. He added: “During the commencement of this project, we visited nine countries where we established that the lowest cost per kilometre was 5.6 million US dollars per kilometre and some countries’ prices went even higher to over 6 million US dollars per kilometre.”
“This means that Tanzania is building the SGR project with a cost of less by 50 per cent in comparison to those nine countries,” he said. He said the contracts entered are so called Design-build, which is a method of project delivery in which, one entity works under a single contract with the project owner to provide design and construction services.
“We negotiated with contractor based on experience to avoid burden to the government, and they agreed to fix the contract,” he said. And, the agreement signed yesterday also considered the same; it will not have price escalations or variations. Mr Kadogosa added that in the ongoing construction in the three lots, the government has already paid the contractors a total of 5.34tri/- by November this year.
Giving overview of the project construction, Mr Kadogosa said it has five lots namely Dar es Salaam-Morogoro (300km), which has reached 95 per cent completion and will cost a total of 2.7tri/-.
The second lot is 4.4-tri/- Morogoro-Makutupora in Singida (422km), which its construction has reached 77 percent, the third lot is from MakutoporaTabora (368km), the fourth lot is from Tabora-Isaka (165 km), which signing of its agreement may come any time soon. The last lot is Mwanza-Isaka (341km) of which President Samia Suluhu Hassan had laid the foundation stone in last June and its construction has so far reached 4 per cent.
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