Matia Kasaija, Uganda's finance minister and Ambassador Attilio Pacifici, EU Head of Delegation to Uganda, signed the financing agreement on Wednesday.

Uganda will top up 13.1 million Euros to rehabilitate the railway line that has been out of service since 1993, when there was insurgency in northern Uganda.

The Tororo-Gulu railway line used to be a pivotal economic artery along the East African Northern Corridor linking the Kenyan seaport of Mombasa and eastern Uganda to northern Uganda, as well as neighboring South Sudan and Democratic Republic of Congo (DRC).

"We are now proud to support the revitalization of this important economic link," Pacifici said.

"With this project, the EU continues to support Uganda's economy through the promotion of a multimodal, safe and efficient transport sector. We will in particular support the efforts of government to shift cargo from roads to more environmentally friendly, or greener transport modes such as railways and waterways," Pacifici said.

He said the railway project has been designed to complement the construction of the Gulu Logistics Hub.

The two projects, according to Pacifici, will have a major impact on the facilitation of trade by reducing import and export transportation costs, thereby contributing to regional integration and to strengthen Uganda's competitiveness within the East African Community region.

"The Gulu Logistic Hub, together with the railway line, will be a key import/export platform not just for northern Uganda but also for South Sudan and eastern DRC," he said.

Kasaija said the railway project will benefit from the proximity of the Albertine region, which has the country's oil wells.

"The railway project shall benefit from transportation of equipment and inputs for the construction and operations of the oilfields given the bulky nature of oil equipment," he said.