The N$100 billion Trans-Kalahari Railway (TKR) Project’s management office will be set up in Windhoek, this month, although coal exporters in Botswana are pressing to use alternative transportation as the railway project has not picked up yet.
The office that will be situated in Windhoek is expected to carry out the day to day activities towards the implementation of the TKR project and it will be staffed by seconded staff from both Parties (Namibia and Botswana).
After the office has been set up, modalities such as the feasibility studies and the commencement of the project will be announced.
Meanwhile, coal explorers in Botswana are going forward with plans to start production and use present rail capacity to ports in South Africa and Mozambique instead of waiting for the TKR.
Botswana has therefore decided to use alternative sources, by moving on to the available capacity and producing coal now would help them work out the logistics when the TKR is developed.
This will already help Botswana prepare for the supply of the 60 million tons per annum it (TKR) will require.
Producers in Botswana will rail the fuel to the port in Mozambique’s capital, Maputo and Richards Bay in South Africa.
The coal production plans for Botswana came as an international supply of the fuel exceeds demand from the United States, European and Asian price for power-plant coal, which Botswana has, they have fallen for four consecutive years, while the metallurgical diversity used to forge steel has dropped for three years.
High Commissioner of Botswana to Namibia, Tshenolo Modise said the position taken by the Botswana Chamber of Mines is a business decision which she cannot comment on or contradict, saying that the two governments are busy with other projects to prepare for the TKR project to kick off.
“Suffice to say that the Government of Botswana is at this juncture as committed to the TKR as it was the day it signed the Agreement in Walvis Bay. A number of activities are being carried by the two Governments to prepare for the commencement of what is, undoubtedly, a massive project that requires careful and sober execution,” said Modise.
However, The Permanent Secretary of the National Planning Commission of Namibia, Leevi Hungamo reiterated that Botswana and Namibia are Parties in the development of the TKR line Project and as such there is willingness from both Parties to implement the project.
“Both Parties are quite aware of the huge benefits of this project to their nations and the region as a whole and therefore the need to develop this project as soon as possible,” said Hungamo.
Hungamo added that the Government of Botswana and the Government Namibia signed a Bilateral Agreement on the development of the Trans-Kalahari Railway Line and a Port in Walvis Bay, Namibia in March 2014.
Subsequently to the Bilateral Agreement, an agreement on the Trans-Kalahari PMO was signed in September 2014 in Gaborone, Botswana.
“It has been agreed that the PMO office will be in Windhoek, Namibia and is expected to be operational this month,” said Hungamo.
The Project shall be developed through a Public Private Partnership modality based on a Design, Build, Own, Operate and Transfer (DBOOT) contractual arrangement whereby the developer undertakes the financing, design, construction, operation and maintenance of the project and the developer owns the project during the concession period.
Hungamo added that the developer operates the Project over the concession period to recover its investment, operating and maintenance expenses for the project under such tariff structure as may be agreed upon in the concession agreement or the specific project regulatory framework; and
“Developer transfers the Project at the end of the concession period to the Jointly Owned Company (JOC) which is composed of Government Agencies from both parties responsible for Rail in their countries,” added Hungamo.
The TKR project is expected to cost upwards of N$100 billion and follows years of protracted negotiations at setting up a rail link between the two countries.
The 1 500 kilometre railway line should be completed in five years and will initially depend on the ferrying of approximately 90 million tonnes of coal each year to India and China respectively.
Demand for coal is expected to peak around 2020 and Botswana will be hoping to take up the lion’s share of total coal exports, exporting 10% of the world’s total coal production, competing against Colombia, Australia, Russia and South Africa.
Mozambique and South Africa, the world’s seventh-largest coal producer, have offered 20 million metric tons of annual railing capacity to Botswana.