Zambia Railways Considering Various Options to Raise US$248 Million

Zambia Railways Limited (ZRL) plans to raise US$248 million required for its strategic business plan running from 2024 to 2028 through various funding options.

Chairman, Emmanuel Hachipuka said in an interview that the money will be raised from loans from debt lenders, grants from the Zambian government and multilateral institutions and concessional loans from multilateral institutions as well as shareholder equity

The company is also considering collaborating partners for cost-sharing and a number of internal cost savings from operations as well as the sale of scrap and non-performing assets, the chairman said. The investment funding will be raised both locally and internationally.

The money will be used for track refurbishment including the rehabilitation of the Bwana Mukubwa-Kapiri Mposhi section of the railway line and will also be used for locomotive repair and rehabilitation inclusive of shunt locos and repair of passenger coaches, he said.

Furthermore, Hachipuka disclosed that Zambia Railways plans to purchase 10 brand-new locomotives and repair and rehabilitate 460 wagons. The company also plans to purchase 375 new wagons, he added.

These plans have the full support of the government, which owns Zambia Railways, he said. The government has shown commitment to rehabilitating the railway infrastructure through various engagements and supports other key rail infrastructure development such as the Lobito Railway, linking Zambia and Angola and TAZARA Corridors, which link Zambia to Tanzania, he added.

Hachipuka said recapitalization remains critical for the company to sustain its operations. The company has continued to face rolling stock and railway track challenges that are affecting its performance, he pointed out.

The bigger part of the US$248 million is to be sourced as a grant and concessional loan with each accounting for about 41% and 37% respectively of the strategic business plan budget, he pointed out.

This is meant to reduce the company’s financial exposure which has a weak balance sheet leading to weak debt-carrying capacity, Hachipuka added. It is for this reason that Zambia Railways requires support from both the government and its mother company, the Industrial Development Corporation (IDC) to raise the required investment funding.

Hachipuka said President Hakainde Hichilema has stated that the government is committed to working with the private sector in its agenda to develop infrastructure such as the rail sub-sector in the country.

He further said Hichilema has indicated the government’s commitment to ensuring that key rail infrastructure such as the Lobito and TAZARA Corridors are revitalized expeditiously to open routes to the Great Lakes Region among other areas. In addition, the Ministry of Transport has been spearheading various discussions and engagements with multilateral institutions centred around the rehabilitation of railway infrastructure.

The chairman said the government’s goal is to improve track speed, signalling and secure funding for long-term investments.

Written for Railways Africa Magazine by Chamwe Kaira