Uganda Railways Corporation Faces Significant Losses Amidst Operational Challenges

The Uganda Railways Corporation (URC) is grappling with persistent financial losses, despite government investments, according to the Auditor General’s Report 2025. The corporation reported a deficit of Shs32.8 billion for the 2024/25 financial year, highlighting deep-seated issues that hinder profitability.

URC’s challenges are multifaceted, including weak revenue collection, underutilized assets, and a dwindling operational network. The managing director, Mr. Benon Kajuna, informed parliamentary oversight committee members that monthly expenditures of approximately Shs2.5 billion far outstrip revenues, which range between Shs900 million and Shs1 billion. This gap is largely attributed to the high costs of maintaining an aging railway system, fuel, insurance, repairs, and salaries.

“We had a backlog of maintenance of about 1.5 trillion Uganda shillings,” Mr. Kajuna stated, explaining that this has drastically reduced cargo capacity. URC now moves about 300,000 tons of cargo, down from a potential 500,000 tons, due to dilapidated facilities and an insufficient number of functioning locomotives. The corporation ideally needs 15 mainline locomotives but operates with only four, which are frequently out of service and difficult to repair due to a lack of spare parts.

Fuel costs alone consume at least Shs400 million monthly, exacerbated by the need to use two unreliable locomotives to pull a mere five coaches, instead of one locomotive handling 15. This inefficiency means URC spends three shillings for every shilling earned.

The operational network has shrunk significantly; URC now uses only 21 percent (269km) of its former 1,266km meter gauge network. While track rehabilitation projects are underway, extending to Gulu by October and Tororo to Gulu by January, URC management stresses that continuous and increased investment is crucial for recovery.

Further compounding issues are the unresolved discrepancies regarding missing railway wagons. An audit exercise in 2010 identified 394 wagons unaccounted for, a situation complicated by the lack of a formal handover report from the former concessionaire, Rift Valley Railways. Legal battles are ongoing to resolve accountability for these assets.

Despite owning assets worth an estimated Shs5.7 trillion, many remain unproductive, underscoring the urgent need for strategic revitalization and sustained financial commitment to transform URC into a viable enterprise. The parliamentary committee plans further interrogation of URC management to address these critical issues.