Government says investment of $1.2bn over five years needed
Tanzania-Zambia Railway (Tazara) needs US$200 million for upgrade, as authorities seek to resuscitate the line to serve both the copper industry and passenger train.
Bruno Ching’andu, Tazara’s new Managing Director said the money will be used for new rolling stock and track improvements.
However, the cash strapped Tazara cannot raise the finance for the rolling stock and infrastructural improvements while debts also weigh down the company.
Tazara has debts of $700m and lack of investment over many years has lead to signalling and telecommunication systems being vandalised.
“The debts which the authority acquired in the past have negatively affected the operations of the authority. But, if these debts could be cancelled, the institution can get back to its normal operations,” Ching’andu said.
The Zambian and Tanzanian governments paid several years’ worth of outstanding fuel bills in the first part of last year, in addition to millions of dollars in employee salary arrears.
In addition, the Zambian government said that Tazara needed investment of $1.2bn over the next five years to turn it into a profitable commercial enterprise.
Extra capacity is needed to reduce unit transport costs on the line, which currently has haulage capacity of 600,000 tonnes a year but which could carry 2m tonnes a year with the hoped-for investment.
Tazara is expected to carry 381,000 tonnes of freight and 2,280,000 passengers, both interstate and commuter, in financial year 2016-17, generating revenue of $44.10m.
Meanwhile talks have been held with Chinese government for investment, tough no deal agreed on yet.
And efforts to secure private sector investment in public private partnerships (PPPs) are in the pipeline.
Over the past few months, Tazara has concluded agreements with several companies to carry 180,000 tonnes of extra copper a year from Zambia to Dar Es Salaam.
New copper carrying wagons are being rehabilitated to serve the contracts.
Aside from new investment, a recovery in copper prices would increase demand from the Zambian Copper Belt.
However, Tazara could face competition from an alternative copper export route in the near future. The railway from the Copper Belt through Democratic Republic of Congo (DRC) and Angola to the Port of Lobito is being rebuilt. South Africa offers another alternative, either via rail or road.
The line built in the 1970s, by then gave Zambia a means of exporting its copper, via the Port of Dar es Salaam, without moving it through Apartheid-era South Africa.