Status of the Zambia Railways Recapitalisation Plan Initiated in 2021

The Republic of Zambia – Report of the Committee on Legislation and International Agreements on the Consideration of the Statutory Instruments for 2023 for the Third Session of the Thirteenth National Assembly signed off in June 2024, notes the next steps for the recapitalisation of Zambia’s Railways.

On 5th March 2021, Zambia Railways Limited, in collaboration with the Industrial Development Corporation (IDC), signed an Engineering Procurement Construction plus Finance Contract with the Team Sweden Rail consortium, headed by Yapi Merkezi. This contract marked the beginning of an ambitious project aimed at the rehabilitation and modernisation of Zambia Railways Limited.

Project Structure

The total project cost is estimated at EUR 978.08 million, divided into two distinct phases:

Phase 1:

• Involves the final track assessment, market study, and risk assessment for the project.
• Estimated cost: EUR 12.1 million.

Phase 2:

• Involves the actual works on the railway infrastructure and the supply of rolling stock and equipment.
• Estimated cost: EUR 965.9 million (excluding VAT).

Update on the Project

Significant strides have been made by Zambia Railways Limited and the IDC to seek recapitalisation under the Team Sweden Rail (TSR) initiative. Key achievements include:

1. Feasibility Study: Conducted by COWI.
2. Contract Negotiations: Technical specifications and requirements were finalised, culminating in the signing of relevant contracts.
3. Environmental Project Brief: Conducted by Arup and Azurite.
4. Environmental and Social Impact Assessment (ESIA): The draft report has been prepared and reviewed, with the assessment still underway.
5. Employee Training and Capacity Building: Conducted by Cleverton Associates with support from the Swedish Counsel of Industries.
6. Market Study and Risk Assessment: Successfully concluded.
7. Phase 1 Progress: The final track assessment is 86% complete, with an expected completion in Q1-2023. However, delays in the settlement of Interim Payment Certificates have extended this timeline.

Outstanding Items to Finalise and Trigger the Implementation of the Project

Several critical items remain to be addressed to finalise and trigger the implementation of the project:

1. Completion of Phase 1 Works:
   • Originally estimated to be completed by Q1-2023, delays in payments have extended this timeline. The contractor is awaiting payments for four Interim Payment Certificates from the IDC. These delays are attributed to the management of cash flows within IDC’s available resource envelope.
2. Environmental and Social Impact Assessment (ESIA):
   • The ESIA, a prerequisite for attaining financial close, remains outstanding and is contingent upon the completion of Phase 1 works.
3. Commencement of Phase 2 Works:
   • Dependent on the completion of Phase 1 and, more critically, the attainment of financial close.

Committee’s Observations and Recommendations

The Committee has resolved to await a progress report, particularly focusing on the completion of Phase 1. The successful completion of this phase is crucial for the project’s advancement and the commencement of Phase 2.

The modernisation of Zambia Railways Limited is a significant undertaking with the potential to transform the country’s railway infrastructure. Despite some delays, the project is progressing, with important assessments and studies nearing completion. The focus now remains on overcoming the current challenges to ensure the timely completion of Phase 1 and the subsequent initiation of Phase 2.