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Canadian Firm’s Bid To Revive Zimbabwe’s Defunct Railway Sector

Zimbabwe's Defunct Railway Sector

Zimbabwe's Defunct Railway Sector

By Wallace Mawire: CPCS Transcom, an international infrastructure development firm specializing in private sector participation in transport,power and urban sectors has conducted consultancy into the future and funding of the Zimbabwe railway sector to come up with sustainable solutions to revitalize its operations.

Zimbabwe’s railway has not been spared from the collapse which suffered most of the country’s infrastructure following the economic downturn.

Glory Jonga, Vice President of CPCS Transcom International has conducted a study titled:The future and funding of the Zimbabwe railway sector:sustainable solutions.

His study has focused on Zimbabwe rail infrastructure needs,bottlenecks,strategies,public-private participation and has provided examples of funding initiatives.

CPCS comprises Canadian consultants specializing in private investment in infrastructure.The firm began operations in 1969 as a subsidiary of Canadian Pacific Railways and has experience in more than 90 countries, according to Jonga.

Some of the firm’s major accomplishments include enabling private investment in nine railway systems in Africa, seven of which are now complete and two are ongoing.Enabling private investment in ports in eight countries in Africa, six of which are complete and two ongoing including the current Mombasa Port privatization.

The firm is also the lead consultant on the Trans Kalahari Railway study.

Jonga says transportation infrastructure in Zimbabwe is among the main bottlenecks to productivity growth and competitiveness,social/economic development and regional integration.

“The impact is particularly severe for landlocked countries like Zimbabwe,Zambia,Malawi and Botswana,” he adds.

He further adds that efficient infrastructure and associated logistics services are critical to attracting Foreign Direct Investment (FDI).

According to his assessment on the North-South Corridors, the major bottlenecks are the railway network which is not operated efficiently due to issues related to hard infrastructure and operations,missing rail link between Lions Den and Kafue, the long border crossing times of the order of 1 to 2 days at Chirundu and at Beitbridge which are being addressed by ongoing projects. Jonga hastens to say that these efforts must continue.

“Similarly, long border crossing times at across the border in Kasumbalesa, between Zambia and the DRC, must be addressed,” Jonga says.

As the general strategy for Zimbabwe Railway, Jonga says the rail network should be expanded where feasible to meet the needs of the growing economy of Zimbabwe and the SADC region.

On the short term strategy, Jonga says there is need to restore acceptable level of service on the trunk lines through PPPs.

His medium term strategy involves improving the level of service on the regional trunk lines and to carry out feasibility studies for the other line extensions and missing links.The long term strategy involves achieving best in class performance on the trunk lines,successful commercial operations on inter regional links and other medium term lines and further extend the network.

Some of the key futures of concessioning proffered by Jonga include PPPs where government retains ownership of infrastructure assets, but moveable equipment such as wagons and locomotives can be sold or leased to the concessionaire.

Jonga says the concessionaire normally has responsibility for management and regular maintenance of all fixed assets.

“Payment is normally a combination of initial lump sum and an annual lease payment as well as an annual fee based on revenue or profit levels,” Jonga says.

He adds that all regulatory issues can be contained in the concession agreement.Some of the concession schemes he lists down include build own operate,build operate transfer,build own operate transfer,open access structure and full privatization options.

On the open access (Multiple operators), the rail is divided vertically into different functions namely operations,maintenance and infrastructure and each function can be concessioned.

“The separation of infrastructure and operations allows the creation of multiple operators who share the use of the track,” Jonga says.

There will also be an establishment of a track/infrastructure authority mandated with ownership and maintenance responsibility for the track.”Non-exclusive franchises to operate freight and passenger trains over the railway are granted to multiple operators.The infrastructure and operating units can be sold outright or privatized through a medium or long term concession,” Jonga adds.

He says the advantages of the open access are an opportunity to introduce competitive rail operators, where transport competition does not exist.Jonga says in Zimbabwe, significant truck competition reduces this as an advantage.He also adds that there is an opportunity for unbundling of rail business to enable greater variety of owners/operators and greater local involvement.

Some of the disadvantages of the open access outlined by Jonga include significant regulatory involvement required by the government of Zimbabwe with respect to relationship between track authority and operators to prevent infrastructure organization from simply passing on its costs to operators and engaging in monopoly practices.

He says its is unattractive to potential operators due to increased competition and because their interests are adverse to track authority.

On full privatization, Jonga says all assets, including the infrastructure,land,building and equipment would be sold through public listing or sale to a group of investors or single investor.

Surplus (non-core) assets may be separated prior to sale.Safety and environmental issues regulated by an authority that is established independently from government and payment will normally be in one lump sum.

Jonga says the advantage of full privatization are an opportunity for the government of Zimbabwe to divest of the NRZ and will result in elimination of all future financial obligations.

However, Jonga says the disadvantages of full privatization are a requirement of substantial political will and support.He says it results in significant loss of public control over rail infrastructure and operations development.He adds that legal impediments to transfer of title may exist, significantly slowing down implementation.

Jonga says that while opportunities for commodity and manufactured goods are slowing in Zimbabwe they see strong opportunities for Canadian exports in development of infrastructure.He says many of these opportunities need Export Development Canada (EDC) support.

Jonga says they are finding opportunities to use their stre

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