Biggest private sector project gathers steam

MBONGENI MGUNI
Staff Writer | Friday December 3, 2010 00:00

 

Fifty local and international corporates will early next year know whether their bids have been favoured to undertake the mammoth Trans-Kalahari Railway and Walvis Bay dry port.

This comes against the background of the World Bank offering further technical and financial assistance for the country's single biggest private sector-led project.

When completed, the project will involve a 1, 500-kilometre railway line connecting the eastern Botswana coal-field to the country's copper, silver and uranium-rich western districts through to Walvis Bay in Namibia, where Botswana plans to build a dry port.

The port will be developed on a 36, 233-square metre piece of land granted by Namibia under a 50-year lease.This week, government and private sector strategists spent days pouring over the recently released draft pre-feasibility study (PFS) on the Trans-Kalahari Railway (TKR), which specifies the technical, financial and economic viability of the project and its connection to the dry port.

In the draft, the consultants have also recommended methods of private sector entry into the project and key requirements for further progress.

The study - a P3.2 million document funded by the World Bank - forms the basis for the railway and port projects, which are expected to unlock Botswana's mineral potential on a cost-effective basis.

Zambia, which is also leasing land from Namibia, is far advanced with a P47-million dry port, giving the land-locked country access to the Atlantic Ocean.

The Permanent Secretary at the Ministry of Transport and Communications, Mabua Mabua, said the current focus in the project's development was on providing input to the draft PFS and gaining cross-sectoral buy-in.

Botswana and Namibia signed a Memorandum of Understanding towards the project on Monday, signalling both governments' commitment to its successful undertaking.

'At the moment, we are assessing the draft, looking at whether to approve it or not and what modifications we want,' Mabua said. 'We need to have input and transform it into an acceptable document.

'The consultants have presented it to us and because this is a very complex project. We have a lot of input to make and consolidate our views. Based on the draft, Government or the development partners will decide whether to conduct a detailed feasibility study.'

Mabua revealed that 36 Expressions of Interest had been received for the TKR, while another 14 were secured for the dry port. The PS said the PFS would not be made public in order to protect the integrity of the relationship between Namibia and Botswana.

World Bank executives are also keenly awaiting sight of the draft, which will determine their further participation in the project. The World Bank's Botswana and Namibia Country Manager, Timothy Gilbo, said the Bretton Woods institute was keeping its options open.

'A lot depends on what the draft says and whether Government wants us involved,' Gilbo said. 'We are always open if Government wants us to be involved.

'This is a very big undertaking. Railways always are [big undertakings]. And the economies will not work without high volumes, which are usually from mining.

'In terms of the scale, we would expect the bulk of these volumes to come from the private sector, especially from mineral resources.

'We are very interested to see what the PFS says about public finance. But for something of this scale, there would not be a rationale for that.'Gilbo explained that the World Bank financed public projects through governments, while its sister body, the International Finance Corporation, would possibly be interested in the TKR and dry port project.

'The IFC lends money to the private sector, and if there was a project that made sense which required funding, the IFC could be interested,' he said.

Were the government to seek finance for public funding of any component of the project, it has a variety of sources to choose from, some more appropriate than the World Bank, Gilbo added.

The World Bank, however, will also fund feasibility studies for railway lines from Mmamabula to Ellisras in South Africa and another from Mosetse near Francistown to Kazungula.

Botswana is hoping winning corporate bidders will kick-start the railway and port development by June next year. Once complete, the railway and port will offer a highly competitive and cost-effective alternative to the existing export and import lines through South Africa.

The project will open up lucrative trade routes to the Americas and Europe, the latter already duty- and quota-free through an Economic Partnership Agreement signed last year.