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Trans-Kalahari railway projects hits snag

Tue, 15 September 2015 16:49
by Charmaine Ngatijheue
News Flash

The Trans-Kalahari railway project a partnership between Namibia and Botswana has hit a snag following Botswana’s failure to raise its part of the financial contribution, The Villager can reveal. 

The Villager understands that while Namibia has raised N$33m for the construction of the railway line, Botswana is still to find a source of the funds. 

TKR focal person in Namibia, Robert Kalomo, spoke to The Villager, saying much cannot be executed regarding the project until the Botswana government also makes its contribution. 

“We expect the Botswana government to make the same contribution as we did for the project. We are in a difficult situation as much cannot be done without Botswana making its contribution. 

The TKR office is also up and running, and we requested Botswana to send their people three months ago because the office only has Namibians. But, no one has come to date from there,” Kalomo charged. 

He maintained that the TKR project is shared between the two countries, thus Namibia may not kick-start it without Botswana’s input. Thus, construction came to a temporary halt. 

In 2014, the two governments signed a bilateral agreement on the development of the Trans-Kalahari railway line and a dry port in Walvis Bay. 

The bilateral agreement is meant to cement the Memorandum of Understanding (MoU), which the two governments signed on the TKR in 2009. 

The project’s tender was reported in other media to be worth N$15 billion. 

The 1,500-kilometre Trans-Kalahari Railway (TKR) is set to unlock the value of the massive coal resources in eastern Botswana through exports via Walvis Bay. 

Research estimated that the railway line, port and loading facilities together could cost between $11.7 billion to $14.7 billion (P95.1 billion to P120 billion) or N$155 billion to N$195b. 

“The N$15b for the tender was the figure we summed up when we first had the feasibility study. 

Between now and then, that figure has changed, but I cannot say by how much. 

We agreed to develop the project through a public-private partnership (PPP) 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. 

The investor/developer will then transfer the project to government,” Kalomo explained. 

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 before transferring 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. 

A detailed feasibility study will be consummated following the completion of a proper engineering study. Then, a detailed design of the infrastructure will be created. 

Earlier in the year, coal explorers in Botswana were going forward with plans to start production and to use present rail capacity at ports in South Africa and Mozambique, instead of waiting for the TKR. 

Botswana, therefore, decided to use alternative sources by moving on to the available capacity and producing coal now, as it would help them work out the logistics when the TKR is finally developed. 

This was meant to pre-emptively help Botswana prepare for the supply of the 60 million tons per annum it (TKR) will require. 

Botswana planned on railing the fuel to the ports 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 prices for power-plant coal, which Botswana has, have fallen for four consecutive years, while the metallurgical diversity used to forge steel has dropped for three years. 

About TKR 

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 these 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. 

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 and 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. 

When contacted for comment, Botswana’s High Commissioner to Namibia, Tshenolo Modise, only told The Villager to get a comment from the TKR head office in Namibia.