From a landlocked to a land linked Zambia CHINGOLA-SOLWEZI-JIMBE RAILWAY LINE Presented by Ministry of Transport Works Supply and Communications and October 2013 Presented to PUBLIC-PRIVATE DIALOGUE FORUM Johannesburg, South Africa
Outline.. INTRODUCTION REGIONAL MAP AND POSITION OF ZAMBIA PROJECT TYPE PROJECT IMPORTANCE TO SADC INFRASTRUCTURE STAGE OF DEVELOPMENT LEVEL OF ENGAGEMENT OF KEY ACTORS CHALLENGES & FINANCIAL REQUIREMENT CONCLUSION
DEVELOPMENT OF INTERNATIONAL SPOKE & HUB TRANSPORT LOGISTICS CENTER AND INLAND PORTS
1. Introduction... Zambia is strategically poised at transforming its geographic absolute advantage of being a landlocked country to being landlinked. From its eight neighbouring countries, Zambia appreciates the regional economic confidence and support it gets as exemplified here by SADC and the NEPAD Business Foundation in according us the opportunity to present our vital jigsaw puzzle pieces to the SADC Regional Infrastructure Development Master Plan. The Chingola Solwezi Jimbe Railway Line is one of the main priority Zambian infrastructure development projects which not only stands as a derived demand transport infrastructure project from the increasing economic and more especially mining activity sectors but an essential rail link for trade and regional development between Angola and Zambia, AND GETWAY TO THE WEST To realize the benefits of this project and indeed other projects, the Government of the Republic of Zambia has acknowledged the need to appropriately engage potential partners and investors. To this effect, we have an established legal and institutional frameworks to guide our partnerships and collaboration, i.e. the Zambia Development Agency Act and the Public Private Partnership Act of 2009 among others. Chingola Solwezi Jimbe Railway Line is thus being proposed for development, construction and operation on a Public Private Partnership basis. With an estimated internal Rate of Return of 15% at a project cost of USD$ 1.1 billion the project has been evaluated to have positive Net Present Value. Its direct benefits amongst others include providing the shortest rail link and export route for the SADC Region through Port Lobito, importation of refined oil products from Angola, reduce regional transport cost by providing a more competitive and appropriate transport mode for the SADC bulk cargo for both imports and exports. Our project plans are alive to the rehabilitation of Port Lobito and the railway network in Angola, our commitment to SADC and more especially the Regional Infrastructure Development Master Plan (RIDMP) on the Lobito Development Corridor.
PROJECT LOCATION... Phase 1 Chingola-Solwezi-Lumwana-Kalumbila freight rail link (through to Kalumbila) Phase 2 Connecting Kalumbila to the Zambian border with Angola at Jimbe and linking to Benguela Railway
2. Project Type... The Chingola-Solwezi to Jimbe Railway Project is in phases. Phase one involves the construction of rail line project from Chingola in the copperbelt of Zambia to Solwezi in the NW Province. Phase two in involves undertaking detailed and full feasibility studies and design, engineering, procurement and construction of the rail line from Kalumbila to Jimbe. The project aims at connecting the Zambian railway network from Chingola were it currently ends, to the Angola railway network, yet to be brought to border town of Jimbe. The rail link pronounces the economic viability of Port Lobito as it will appropriately serve as the main transport mode for freight cargo to and from Zambia and Democratic Republic of Congo. Therefore, the Chingola-Solwezi to Jimbe Railway link affirms the impetus of the Lobito Development Corridor as it shall provide an alternative import and export route for Angola, Zambia, Democratic Republic of Congo and the entire SADC member states with South and North American countries and other Atlantic Ocean bordered countries. This railway project has an estimated total length of 640 km of which the first 290 km from Chingola to Solwezi has had an aerial route survey and a detailed environmental impact assessment conducted. The construction of this surveyed component of the project has been estimated to cost USD$470 million. The remaining segment from Solwezi to Jimbe with estimated length of 350 km shares a similar plateau land scape and environment and has a preliminary construction cost estimate of USD$630 million. Thereby bringing the total project cost to USD$ 1.1 billion for a complete 640km railway spur. The Government of Zambia commits to construct, develop and operate this line on PPP basis
3. Project importance to SADC... SADC has two prominent ports on the Atlantic Ocean cost- The Port of Walvis Bay in Namibia and the Port of Lobito in Angola both of which are being developed as the main import and export points for SADC trade cargo with players on the Atlantic Ocean market. The Ports are currently served by road networks which are increasingly being congested, and posing an environmental hazard in terms of pollution, traffic accidents and other social undesirable such as the HIV and AIDS and other communicable diseases. With the Ports currently trading at over 4.5 million tonnes per annum with about 300 ship calls per month, the road has become an inappropriate transport mode to meet the demand capacity. SADC region now requires reliable and environmentally friendly transport services with capability to safely transport its bulk and heavy exports (minerals and other primary products) whilst at the same time importing, bulk, equipment and materials for its development. The Chingola-Solwezi to Jimbe Railway Projects is the identified solution with respect to the Port of Lobito. The economic benefits thereof are cost effective transportation of heavy freight, reduced maintenance costs for the road infrastructure, reduced transit times as well as cost of moving goods whilst also allowing importation of fuel at lower cost. The Railway project will also provide considerable employment opportunities both during and after construction. The Project with thus enhance regional trade competitiveness. The two Governments of Angola and Zambia have committed to realizing this project as agreed in the Lobito Development Corridor Agreements. Their commitment is also attested by the current railway developments in the two countries.
4. Stage of Development... The project is being considered in two phases. Phase 1 (290km) essentially connects Zambia s emerged mining areas of Solwezi, Lumwana and Kalumbila to the Zambia railway network at Chingola. The following milestones has been achieved to this effect: A Concession Memorandum of Understanding has been signed between Government and a local private sector developer (North West Railway Co. ltd.); A Rail Construction permit was issued to North West Railway Co. Ltd; An Investment License has already been issued by the Zambia Development Agency; Aerial route Survey and EIA (approved) was conducted Detailed preliminary capital cost assessment performed estimates -10% to +30% Strong letter of intent to participate in the Project from an Operator and Rolling Stock supplier; Strong letter of commitment from potential off-takers (FQM & Barrick) Construction of Phase 1 is expected to commence in 2014 and be completed in not more than 2 years. Phase 2 of the project requires a detailed feasibility, engineering design study though is has been preliminarily estimated to be 350 km. Considering that the land scape and geographic features around phase 2 are similar to phase 1, the cost estimate for Phase 2 is USD$630 million.
5. Level of engagement of key actors.. At regional level, Zambia has expressed its commitment towards this project through its support of the SADC RIDMP and more specifically the Lobito Development Corridor Agreements. Between Angola and Zambia, there will be need, at an appropriate time, to revise their railway bilateral agreements. For the purpose of PPP engagement, Angola and Zambia will need to harmonise their respective legislation. Committed to provide the required land resource for the project. Consultation with the local leadership is on-going.
6. Challenges & Financial Requirments.. Phase 1 funding requirements include capital expenditure of USD $470 million. Whereas Phase 2 has been estimated to cost USD $630 million. According to KPMG Service Limited, for Phase 1, the project is expected to yield an approximately 15% internal rate of return based on a USD2 to 2.5 million per 1% shareholding calculation. The project currently requires USD 10 million to take it to bankable feasibility and or financial close. Phase 2 detailed feasibility and engineering design can be conducted at an estimated cost of USD $ 6 million and will require collaboration with the Angolan government especially with respect to the segment at which the project crosses the border. In this regard, SADC is anticipated to prudently facilitate the process.
CONCLUSION. We have all the confidence and optimism of actualizing the ChingolaSolwezi to Jimbe Railway Line; The SADC member states have expressed their support for this project as coined under the Lobito Development Corridor initiative facilitated by the SADC Secretariat; The Lobito rail line project connecting Zambia to the Port of Lobito in Angola is to get an US$18 million funding from the African Development Bank (AfDB) to facilitate regional and international trade for bulk cargo such as copper whose production is projected to rise to more than a million tonnes by 2015. The project will significantly improve not only Zambia s economic development but Angola s as well. We look forward to your continued support and partnership towards realization of this project THANK YOU!!!