Amb. Emmanuel Mwamba

HON.MILUPI ABUSING PPP PROJECTS

By Amb. Emmanuel Mwamba

Minister of Public Infrastructure, Hon Charles Milupi has announced that the Public Private Partnership Council has approved a 25-year Concession Agreement with a Private Company called Nkula Zambia in partnership with South Africa Business Development Forum to do roads in Western, North-western and Copperbelt Provinces.

According to this package dubbed “Development of the Western Province Trade Facilitation Routes inclusive of Resettlement Schemes and Border Facilities”, the Finance, Design, Construct, Rehabilitate, Operate, Maintain And Transfer Public Private Partnership Model, will cover a total of 2,208.5 kilometres of core road network.

Some roads will be neq construction while others will be upgraded to international bituminous standards.

Hon. Milupi listed the roads as follows;

  1. Tapo – Kalabo – Sikongo – Angola Border Road (125km).
  2. Sioma – Shangombo Road (175km).
  3. Lufwanyama – Kankolonkolo – Kasempa Road (225km).
  4. Kasempa – Kaoma Road – Luampa Junction (280km).
  5. Luampa Junction – Machile – Simungoma Road (340km).
  6. Livingstone – Katima Mulilo Road (225km).
  7. Resettlement Roads (minimum of 500km).
  8. Shangombo Bridge (approximately 8.5km).
  9. Sikongo Border Post and Trade Hub.
  10. Shangombo Border Post and Trade Hub.
  11. Katima Mulilo Border Post and Trade Hub.

It is strange that a 25-year Concession has been given to a private company to build and run these roads in a non-competitive, opaque and non-transparent manner and whose value has not been disclosed.

The Concessionaire will seek financing and obtain a loan under the direct or indirect guarantee of the Republic of Zambia.

Looking at the roads, it appears that these are best done under public sector financing as they are non-economical but developmental in nature.

PPP roads are highly commercial and are financed by the private sector.

The return of investment is guaranteed by traffic volume that will help repay the loan through tolling or annuities.

Further, the value of the project has not been disclosed.

This is important as the private company involved will obtain the loan against the Republic of Zambia and the road assets and business plan on how to repay the loan, will act as collateral security or Government may issue a sovereign guarantee.

I noted that in South Africa, there are two models of PPP adopted for the development of national highways.

They are; Build–operate–transfer or, Build–own–operate–transfer.

This is a form of project delivery method, usually used for large-scale infrastructure projects, wherein a private entity receives a concession from the public sector to finance, design, construct, own, and operate a facility stated in the concession contract.

The mechanism to recover the investment is through BOT (Toll) or BOT (Annuity).

(a) BOT (Toll) Model: In the BOT (Toll) model, the Concessionaire recovers his investment by charging toll from the users of the road facility.

This model reduces the fiscal burden on the government while also allocating the traffic risk to the Concessionaire.

This is the model used for most of the projects and can be regarded as the default model for highway projects.

(b) BOT (Annuity) Model: Under a BOT annuity model, the Concessionaire is assured of a minimum return on his investment in the form of annuity payments.

The Concessionaire does not bear the traffic risk and the Government bears the entire risk with respect to toll income.

CONCLUSION

From the above, it is clear that until the terms and conditions are disclosed, and until the commercial viability of this project are demonstrated, this may be a conduit to obtain a large international loan on the charge of the Treasury.

Hon. Milupi or the Council of PPP should not abuse their offices.

They have a noble duty to disclose the value of this loan, and guarantees that Zambia is expected to give.

In my view, Hon. Milupi has chosen to undertake roads in his constituency and his province under an opaque process whose cost burden will be borne by the country.

If he genuinely wishes to do viable PPP projects, he should follow Zambia’s renowned trade routes such as the Lusaka-Chirundu, Lusaka-Livingstone, Lusaka-Ndola-Mufulira, Kapiri-Serenje-Mpika-Nakonde, and similar roads that are in extremely dilapidated state but are core to trade/sea routes of the country.

9 COMMENTS

  1. Emmanuel, you simply have not been on the ground. I once travelled from kaoma to kasempa through one of the road earmarked for tarring. On the way, i met more that 100 trucks on gravel driving from Lumwana and other N. Western mining firms. Its shorter to go that route than drive through Lusaka. So if you think they are not economical, why did you spend the Euro Bond on roads leading to mabla or building 2 universities in one district when others had none? Check your facts bwana

  2. It pays to read an article and understand what the matter is all about.

    My reading of Amb.Mwamba’s article is that:-
    1.Why has a package project of this magnitude been offered without open tender?
    2.Why are details of this project not disclosed. I bet even Doug has no clue as to what this
    arrangement is all about.
    3.In most cases PPP projects are self financing. In the case of the Milupi project.The Private
    company is going to obtain a loan guaranteed by the Zambian Government with all risks
    of being responsible of eventual repayment of the Loan once there is default.
    These and many other issues require to be fully disclosed to the Zambian people.

  3. Hon. C. Milupi M.P. Minister of Infrastructure Development and Housing, for Western Province.

    Any minister in a national government must be politically prudent and be advised not to be seen to concentrate his/her efforts on his home province. He/she will be misunderstood and may send wrong political perceptions that will entangle his government in unnecessary political misunderstandings.

  4. It is interesting that mwamba acknowledges the deplorable state of existing major roads despite the PF incessant self-praise and unrivalled appetite to borrow for roads projects. He should explain why some provinces were shut out from government projects such as universities or feeder roads? In order to provide guarantees, it’s inconceivable that full disclosure would not be provided by government.
    Some key facts to note;
    a) The government has little wiggle room to borrow for necessary infrustructural projects due to prohibitively high debt. So PPP models are the way forward.
    b) The contemplated roads projects are of significant economical value by tapping into the Angolan market, shortening transit times to North-Western Province and the DRC.
    c) Reduced loads on existing trunk roads thereby reducing maintenance costs and prolonging their lifespans.
    Mwamba don’t jump the gun. Bola panshi!

  5. OUT of all ambassadors, ichichena echipuba sana. Nimpelwa mano. Your PF, took development only to their province. That is the more reason ichi chipuba, tachakale chiteka. Ukubilima kwalichilamo. End of you and PF.

  6. The problem is that all the people with negative comments have not been on the ground to understand the economics viability of these roads. Look any investor who wants to do a PPP would first have carried out a feasibility study and an investment appraisal otherwise they would not go into it. Those roads earmarked for PPP are economically viable. The road from Kasempa to Kaoma through Luampa to Machile through to Simungoma is a shorter route to Walvis Bay Port and to RSA. This means that most of the trucks carrying copper and other minerals will use this route. As for the Tapo to Kalabo through to Sikongo up to the boarder with Angola and also the Sioma to Shangombo up to the boarder with Angola, I mean it goes without saying that Western part of this Country had never been opened. There will be so much trade between Zambia and Angola using these routes. Tourism also to the Liuwa national park.
    It is not the issue of Hon Milupi focusing on where he comes from but identifying where opportunities are but we’re never developed by the previous regime for reasons best known to themselves. Why were people flocking to Shangombo for diamonds? Was it not to follow these resources? From Machile, Mulobezi all the way up to Sesheke we had the best tick tree and the Masese Forest station which has been neglected by the previous regimes used to manage this resource very well. If we’ll harnessed, this can bring a lot of revenue to the country perhaps more than mukula. Exported to RSA using the same road. What about fuel, wouldn’t the Zambian Government get fuel from Angola if these routes are opened up?
    This Government will deliver because they are making the right decisions. Governance is about making decisions aimed at benefiting the people.

  7. Stop calling yourself an Ambassador because you are and will never be an Ambassador.Which country have you been sent to represent Zambia?
    Ambassador is an appointment not a qualification.
    Ba Zambian Observer stop calling Emmanuel Mwamba the imposter as Ambassador.

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