Scepticism as BR promises Mmamabula railway in three years
Mbongeni Mguni | Monday November 15, 2021 08:31
The rail utilities’ executives recently found themselves facing off against sceptical industry players at the Botswana Asset Owners Forum hosted by MN Capital. The forum was called to discuss infrastructure funding, particularly the opportunities for private sector support for public works and the challenges thereof.
The Mmamabula-Lephalale rail link has been in Botswana Railways’ plans for many years and the delay in its construction has frustrated developers along the country’s eastern coalfields. The link, which will run for about 130 kilometres to Lephalale in Limpopo, would provide a more direct, high-capacity route for coal and other bulk commodities to the sea, through both Richard's Bay and Mozambique.
Despite being one of Botswana Railways’ top infrastructural priorities, the export route’s development has dragged over the years, even through private sector participation, including by the mines, has been encouraged.
Recently, Botswana Railways' head of Strategy and Foresight, Thabo Gabanamotse found himself under pressure after committing to the finalisation of the railway before a room full of private sector players from different industries.
“We believe infrastructure is a key enabler for economic development and for us to cultivate mining or foreign direct investment and others, rail connection needs to be in place,” he said in a panel discussion during the forum. “We have some projects that we want to do through the public-private partnership model because government does not have enough funds and one of these is the Mmamabula-Lephalale railway. “We need private partners where fund managers put in equity and already, there are some mines lined up waiting for this. “We are walking the talk and estimating that in two and a half years, we will have opened the Mmamabula-Lephalale railway.”
The pledge was immediately pounced on by Business Botswana president, Gobusamang Keebine.
“Do you know how long we have been talking about this? “Rre Makwinja was there and even retired without this railway and it has long been said that it is a private sector joint project. “I think we have fatigue about how it’s so easy to just say, without anything concrete. “You say two and a half years but nothing is in place yet and processes will take another three years. “Tell us how you arrived at that two and a half years. “If you had said you already have a Build, Operate and Transfer partner, I would understand, but if you do not, then we are still far.”
In 2019, then Botswana Railways CEO, Leonard Makwinja told BusinessWeek construction of the Mmamabula-Lephalale line would begin in the second half of 2021 and facilitate the creation of 3,000 jobs.
More criticism was levelled against Botswana Railways after executives revealed that the country’s main railway line, the main North to South link, has been in place since 1897.
“It’s a serious indictment on us that we have a railway built in 1897. “What are we doing building malls when we should be investing in more railways,” said Mokwena Morulane, chairman of Minergy Ltd, which is one of two coal producers in the country. Last year, Makwinja told a parliamentary committee that Botswana Railways planned to build more malls through as its railway business continued to underperform. Through a subsidiary, Botswana Railways owns Rail Park Mall in Gaborone.
For his part, Gabanamotse said the rail utility had already done significant groundwork towards the Mmamabula-Lephalane link.
“Yes it’s ambitious but this line has a lot of investors waiting,” he said. “We are expecting to move coal and other commodities through it. “It’s not a long line and we are still waiting for two ministers to sign a Memorandum of Understanding and that can happen at any time. “We are adamant that we can conclude this project within three years.”
Botswana Railways has opened a project office for the railway and has weekly meetings with Transnet of South Africa. The two governments have broadly committed to the project. It is estimated the Mmamabula-Lephalale railways could cost beyond $200 million.
Local fund managers, who hold billions in pension and insurance fund assets, are reportedly willing to consider partnering with Botswana Railways but want a government guarantee before agreeing to anything. Government, meanwhile, wants the project to stand on its feasibility and economics and is traditionally reluctant to grant guarantees.