Tanzania has warned Turkish construction company Yapi Merkezi over delays on the $909.1mn Tabora–Isaka section of its Standard Gauge Railway (SGR), after a Chinese subcontractor reportedly achieved as much progress in two months as the main contractor had delivered over four years.

Transport Minister Makame Mbarawa issued the warning on October 26 in Bukene, on the third day of an inspection tour of SGR Lots 3 to 6, saying the government would not tolerate continued underperformance on strategic infrastructure projects, according to The Citizen on October 27.

Mbarawa said China Civil Engineering Construction Corporation (CCECC), brought in to accelerate construction, completed work equivalent to 5% of the project during September and October, matching the progress he attributed to Yapi Merkezi over the preceding four years.

The government had considered terminating Yapi Merkezi’s contract, Mbarawa said.

“After conducting an assessment, the government established that removing the contractor outright could have led to further delays and financial challenges. We therefore advised the contractor to engage a capable subcontractor to support the project,” Mbarawa said.

He added that the government could not unilaterally force the contractor to adopt an arrangement outside the contractual framework.

The Tabora–Isaka section, designated Lot 4, covers 165 kilometres, comprising 130 kilometres of main line and 35 kilometres of sidings and passing loops. Yapi Merkezi signed the contract, valued at $909.1mn including value-added tax, in July 2022, with a 42-month construction period.

The section forms part of Tanzania’s wider SGR network, intended to connect the port of Dar es Salaam with Mwanza on Lake Victoria and improve freight links to neighbouring landlocked countries.

Government targets 2028 completion

Mbarawa expressed optimism that the faster pace of construction would increase the chances of completing Tabora–Isaka in 2028, although he did not announce a revised contractual deadline.

He credited Tanzania Railways Corporation (TRC) with managerial and technical oversight that had helped restore momentum to the delayed project, and stressed that public spending on the SGR must deliver value for money.

TRC director general Machibya Shiwa said the corporation would continue closely supervising the project, ensuring the availability of construction materials and tightening expenditure controls. Contractors have also been instructed to submit daily work plans covering activities such as bridge construction and railway embankments.

Construction on Lots 3 and 4, including the adjoining 294-kilometre Makutupora–Tabora section, has also been reorganised into five smaller work areas to accelerate implementation, Mbarawa said.

On October 24, Mbarawa said TZS3.67 trillion (approximately $1.39bn) in financing secured in 2025 was available to support construction of Lots 3 and 4, covering a combined 424 kilometres of main railway line.

He attributed delays primarily to contractors’ planning and implementation problems rather than insufficient financing, explaining that disbursements depended on contractors submitting interim payment certificates for completed work.

The Finance Ministry signed a $1.277bn financing agreement for the Makutupora–Isaka sections in April, arranged by Standard Chartered as a syndicated export credit facility backed by European export credit agencies SACE, EKN and KUKE. The government has not clarified how the TZS3.67 trillion figure relates to that agreement.

The delays on Lot 4 have complicated efforts to extend the railway towards Mwanza and strengthen freight connections between Tanzania’s Indian Ocean port and inland markets.

Prime Minister Mwigulu Nchemba in September ordered an acceleration of SGR works serving the Lake Zone, naming Isaka–Tabora among the sections to be expedited and setting a 2030 target for passenger services between Mwanza and Dodoma.

Yapi Merkezi is also building Uganda’s Malaba–Kampala SGR, where its contract came under political pressure in June after army chief Gen Muhoozi Kainerugaba claimed it had been cancelled, a statement not confirmed by Uganda’s works ministry.

Yapi Merkezi remains the main contractor on Tabora–Isaka, with CCECC assisting construction as the government seeks to meet its 2028 completion target.

See IntelliNews: Tanzania says $1.39bn available for delayed 424km standard gauge railway works
See IntelliNews: Tanzania secures $1.27bn SGR financing deal with Standard Chartered for Dodoma–Isaka rail expansion
See IntelliNews: Tanzania accelerates SGR projects with Mwanza-Dodoma link targeted for 2030