Chinese to help steer Zambia's reconstruction drive

| Wednesday December 15, 2010 00:00

It is early days yet, but going by the recent announcement of a master plan under the Public Private Partnership (PPP) initiative, in which Chinese companies are tipped to play a major role, Zambia is set to maintain the regional construction boom triggered by the building of stadiums for the 2010 FIFA World Cup finals in South Africa.

The country's Minister of Finance and National Planning Situmbeko Musokotwane says the government hopes the PPP initiative will grow the country's gross domestic product (GDP) by at least 10 percent within the next five years through increased investments. It will see construction and refurbishing of major roads, bridges, airports, housing, energy, one-stop border posts and other developments in the service industry. But in line with the country's development plan, the initiative will first focus on infrastructure development.  In response to the United Nations (UN) campaign to provide decent shelter for all, some 12,000 residential housing units will emerge across the country, with Lusaka, Livingstone and the Copperbelt each seeing construction of 4,000 of these.

Part of the initiative will be a study that will train its lenses on the energy sector. It will look at the troubling issue of supply of petroleum products by examining the option of re-designing the 1,700km Tanzania Zambia Mafuta (TAZAMA) Pipeline, so that it can transport finished products  - mainly petrol and diesel. Zambia owns 67 percent of the Pipeline while Tanzania owns 33 percent.

Alternatively, the study will look at the option of maintaining this infrastructure for importing crude oil and explore other sources of bringing in feedstock.  It will also look at available options of rehabilitating and expanding the Indeni Oil Refinery in Ndola.

This should be encouraging news for energy consultants who have long said Government should include the private sector in the operations of TAZAMA and Indeni to commercialise them. Lusaka-based Enfin Solutions chief executive officer Andrew Kamanga believes a private operator should be handed the concession to run TAZAMA through a PPP. The same should apply for Indeni, given the withdrawal of Total's 50 percent investment early this year.

Will this initiative be enough to reposition the energy sector, ensure constant flow of petroleum products and stave off future fuel shortages such as that seen last October? It will, private energy consultants believe, only when the goal of the Energy Policy of 2008 is achieved. In the policy Government declares its intention to 'promote optimal supply  and utilisation of energy for social and economic development in a safe and healthy environment'. An excellent statement of intent that has not been fulfilled, say energy sector experts like Kamanga. Erratic fuel supply has continued to dog the county's potential for development.

If the PPP initiative arrives at a long-term purchase deal with a strong oil producer, if financing of purchase is at affordable prices, it could go a long way.  Involving a consortium of Oil Marketing Companies (OMCs) to buy feedstock is another avenue Government is exploring. These would then take on the risks that go with the purchase system, including financing.

A 2002 study by OMCs on how this can work exists. But it is unclear why it has not been implemented. Therefore, Dr Musokotwane's revelation that the PPP initiative will 'explore other ways of bringing in feedstock' should encourage the private sector. After all, as energy consultants argue, ensuring a steady long-term supply of feedstock will positively impact other areas of the purchase system and should reduce costs in the fuel supply chain.

For the travel industry, the Zambian government's new master plan should also hold out hope. Dr Musokotwane said infrastructure will be built at all active border posts. The minister said the design, construction, operation and transfer model for the infrastructure at Kasumbalesa has unrolled.

Zambia's artery of roads, for long the cause of much despair because of its poor state, will receive attention under the PPP master plan. Musokotwane said the procurement process for construction of dual carriageways between Livingstone and Kafue, between Chirundu and Lusaka and for the Lusaka-Kabwe to Ndola route is 'at an advanced stage'.

Other dual carriageways that will be built include the Chingola-Solwezi-Mwinilunga- Jimbe and the Kafulafuta-Luanshya turnoff. This segment will involve rehabilitation of existing roads, designing and constructing dual carriageways for the entire stretch and construction of toll gate plazas, perimeter fencing and all other ancillary facilities including maintenance and operation of the infrastructure.

With the launch of the Air Botswana (AB) Gaborone-Lusaka direct flight, and the increased air traffic within the Southern African Development Community  (SADC) and beyond, the Lusaka International Airport is to be revamped in order to meet fresh challenges.

Under the plan, it will be refurbished to international standards and will have new international and domestic terminal buildings. Work at the country's prime airport will include construction of parking arcades and hotels. Finalisation of the bidding process should fall before the end of the year, with construction work taking off in early 2011.

Overall, the message in Dr Musokotwane's announcement was that qualified firms and consortia will proceed with developments under the plan on a PPP design, build operate and transfer basis. He said the expected impact of the projects will include several opportunities in various sectors as Government continues to identify areas of possible PPP investment. The private sector will also be free to engage Government on Greenfield projects wherever they see potential to invest.

The PPP unit in the Ministry of Finance and National Planning has carried out initial conceptual work. Now the effort is to develop 'a coherent and comprehensive' master plan to guide the manner in which PPP projects are conceptualised, developed and implemented within the overall framework of the Sixth National Development Plan.

'This will entail deep and broad based consultation and involvement of line ministries, the private sector, development financial institutions, faith-based and nongovernmental organisations and the community at large,' he said.  (Sila Press Agency)