Railway wars � TKO for TKR in the First Round?
Roman Grynberg | Friday April 25, 2014 11:20
Towards the end of March it was all smiles at Walvis Bay amongst those attending the joint Namibia-Botswana signing ceremony of the bilateral agreement to build the Transkalahari Railway (TKR). The Minister of Minerals, Energy and Water Resources Kitso Mokaila signed on behalf of Botswana and Namibia was represented by the Director General of National Planning Commission, Tom Alweendo.
According to press reports the project is expected to run from the coal deposits on the eastern border with South Africa to the Namibian port of Walvis Bay some 1,500 kms away. The railway will begin at Mmamabula and run parallel to the existing railway, diverting at Rasesa, passing near Letlhakeng in Kweneng District and running parallel to the Trans Kalahari tarred highway en route to Walvis Bay, Namibia. In total it is expected that the project will cost in the vicinity USD11 billion or P100 billion. This is without doubt the single biggest project in the history of Botswana, far larger than the investment in the 1970s in the BCL copper-nickel mine in Selebi-Pikhwe.
The announcement put to rest, or at least so it seemed at the time, any further discussion regarding alternative routes. The proposal for the possible railway through Zimbabwe to Ponto Tecobanine on the Mozambique coast was as dead as a dodo and the proposals that the government of Botswana co-fund a railroad from Mmamabula through South Africa which was made by Transnet as well as private consulting firms in 2013 survived as long as an ice cream on a January day.
Beware of South Africans Bearing Gifts!
But then suddenly the game changed again two weeks ago when the CEO of Transnet Siyabonga Gama came to the coal conference in Gaborone and made what was a very surprising announcement to the media just two weeks after the signing of the Botswana-Namibia Transkalahari railway project. Transnet Freight Railway was no longer asking the government of Botswana to pay half the cost of building the railway or even a portion but he is reported as saying that ‘TFR had allocated about R40-billion for the construction of the 105 kms heavy haul-line, aimed at transporting coal from Botswana to South Africa for shipment to international markets. Between 40-million tons and 80-million tons would be transported on the line each, with some of this tonnage to be delivered to power utility Eskom. “Some will be transported to Richards Bay for export to the international market. We are planning to develop the Richards Bay Coal Terminal to support the expected [volumes] from Botswana and the Waterberg coalfield, in South Africa’ Gama went on to say ‘We are finalising feasibility studies [and we] will start constructing the rail link in 2015, immediately after the completion of feasibility studies.’
OK, so the South Africans are going to spend Rand 40 billion building us a free coal railway! Well, it certainly might be paid by the government of South Africa which owns Transnet but you can bet your bottom Pula that it will not be free. As one junior miner put it to me- China and India may need coal but the only country in the world that needs Botswana’s coal is South Africa. Indeed he is right- Eskom is desperate for our coal middlings to burn in their power stations in Mpumalanga and Gauteng as their own supplies dry up. Even their new coal mines in the Waterberg will not be enough to supply their growing appetite for electricity. The current capacity of Transnet to move our coal is probably no greater that 10 million tons per annum, far from the 50 million tons that we are hoping to eventually move. Transnet has certainly done its arithmetic well and figured that the ZAR 40 billion would pay off not only in the fees that would be paid but in making the railroad from the Waterberg to the coast even more profitable as it would result in higher levels of utilisation.
Rhodes and Railroads
and the Three Dikgosi
You would have to be extraordinarily young to believe that South Africans are doing this from the goodness of their hearts. Any Motswana who knows their history will certainly remember what happened the last time a South African i.e. Cecil Rhodes tried to build a railroad in Botswana in the 19th Century . He tried to grab Bechuanaland and the country almost lost its sovereignty.
I like taking visitors to the three Dikgosi monument because it almost always shocks them. My African friends would ask me ‘How can this be a national monument to three men who gave the country to the British?’ No, I reply these men are three very wise fathers of the nation. The visitors, used to national monuments in African capitals that depict soldiers and liberation fighters look surprised. Well I say, just close your eyes for a moment and ask yourself who’s statue would be standing there if Khama III, Sebele I, and Bathoen I had failed to get British Protection in the 1885. Close your eyes and tell me who would be there? It would be either Nelson Mandela if Rhodes had gotten his way and given Bechuanaland to the Cape Colony or much worse it would be Robert Mugabe if it had become part of Rhodesia. The three dikgosi saved Botswana from either a century of apartheid or worse, a bitter and bloody liberation struggle in Zimbabwe and the subsequent authoritarian regime. South Africans never understood what a profound lesson Rhodes railroad and his attempt to annex Bechuanaland had taught subsequent generations of Batswana. The lesson is that in a really bad neighbourhood where you are confronted with violent, diamond encrusted war lords like Rhodes and you are a small and weak nation you simply won’t survive without some very strong friends. The monument represents that geo-political reality that has passed through generations and is firmly implanted on Botswana’s political DNA. It is also a realistic compromise- Botswana only had to grant Rhodes his easements over concessions needed to build his railway from Mafeking to Bulawayo.
Botswana is again confronted with a serious international dilemma. In the world of strategic policy Gama’s announcement of the South African government’s intention to spend Rand 40 billion to build a railroad just two weeks after Botswana and Namibia had signed a railroad agreement can only reasonably be seen as a purposeful and somewhat ham fisted attempt to TKO the TKR in the first round. The model that the governments of Botswana and Namibia are using is one based on build operate and transfer (BOT) where the private sector undertaking the investment and eventually transferring the project back to the respective governments once they have made an adequate rate of return. But if South Africa is going ahead with a railroad that cuts the eye teeth out of Botswana’s coal deposits i.e. the rich Mmamabula coal fields, which private investor will be willing to risk ZAR 100 billion to build a railroad across the Kalahari for the rest of the miners. The answer seems obvious – no-one unless they have loan guarantees and possibly equity injections from the two governments. And would the World Bank and AfDB back such an increase in public debt in Botswana and Namibia when South Africa offers a railway that is debt free? Unless the game changes again it is TKO to South Africa...again!
But maybe it is time to play the same sort of commercial hardball with our neighbours that they have played with us over the closure of the Hyundai plant in the 1990’s and the CIC electricity generation project in 2004. In South Africa really wants our coal and President Jacob Zuma has signed an MoA with Botswana to that effect. Perhaps more importantly South Africa really wants to maintain its strategic monopoly of rail transport to the coast. Eventually this monopoly will disappear but for the moment it is enormously valuable to South Africa and increases the amount of foreign investment that occurs there as a result. Perhaps it is time to welcome the railroad but demand a quota of electricity exports to Eskom in return. Eskom is the only really significant buyer of electricity in southern Africa. This would be far more rational than shipping coal 500 kms to the aging thermal power plants in Mpumalanga and would create jobs and opportunities for Botswana’s coal miners. But then again that is the problem, these are jobs for Batswana not South Africans.
*These are the views of Professor Roman Grynberg and not necessarily those of any institution with which he is affiliated.