Zambia concession problems

[John Ashworth]

It seems there are problems in many parts of Africa once the national rail network has been concessioned out to private operators. While it seemed like a good idea at the time, concessionaires have performed poorly.

ZAMBIAN CONCESSION UNDER FIRE

Posted on 16 October 2009 by Railways Africa Editor

Zambian presidential special assistant for policy implementation and monitoring Ben Kapita has urged the government to take over operations of concessionaire Railways Systems of Zambia (RSZ), even if cancellation of the concession agreement means a cost to the taxpayer. Zambia National Broadcasting Corporation (ZNBC) quoted Kapita saying that investor NLPI Limited “has failed to operate the line”.

Commenting to the press, RSZ CEO Benjamin Even said the company has invested about $US25 million to date, compared to the contractual obligation of $15 million specified in the agreement signed in 2003 (with which RSZ is fully complying) and that a further $30 million is being put in to enhance operations. He was quoted saying: “One must understand that every business venture must include the components of investment and return. If the return is not in proportion to the investment, the business will simply collapse – as was the case with certain other regional railways. The concession agreement did not specify that RSZ is required to bring the rail line to European standards as this would be completely non-commercial without very heavy investment from government.”

RSZ, he pointed out, had continued to pay taxes, despite the difficult operating environment. “RSZ is still investing in the rail line, locomotives, wagons communications and security – but still in proportion to the return which can be generated; all this at a time when parastatal companies in the region are collapsing. RSZ is paying taxes and sustaining itself without creating any burden on the Zambian government or taxpayer, and is at the same time still investing and maintaining its obligation to its employees and suppliers.”

RSZ is firmly committed to running the railway, Even said, despite the difficult policy environment and unfair competition from road transport. “We are 100% committed to continue to run the line. If we were not, we wouldn’t have been investing up to now. RSZ is proud of the way it is dealing with the challenges of vandalism, competition, the bad condition of the line and the world economic crisis.”

He pointed out that RSZ had continued to grow without the support of the government, hauling one million tonnes of cargo annually in the last five years. “This trend is growing with more wagons, locomotives and other means being injected into the system. However, without the support of government in respect of security and transport policies such as road levy, and unfair competition, it will be very difficult to increase tonnages.”