FORMER Finance minister Ng’andu Magande says he agrees with a Southern African Development Community (SADC) technical report that railway concessions in the region have generally been characterised by declining performance.
The report further states that the concessions of the railway in the region had led to the deteriorating state of infrastructure as well as massive retrenchments and reduced business cooperation amongst railways in certain areas.
Mr Magande said the cancellation of a concession agreement with Railway Systems of Zambia (RSZ) by the Government was a welcome move as it was in line with the concerns raised in the 2009 SADC Technical Report on Railway Concessions in the Region.
Mr Magande, who was reacting to Government’s decision to revoke the concession agreement of the RSZ, said in an interview that the 2009 SADC Technical Report covers all railway concessions in the region and such agreements seemed to have failed.
He said the report might have been submitted to former president Rupiah Banda’s administration and no action was taken.
“I hope that this report and another SADC ones are the basis of the action by the Sata Administration as it (the report) clearly indicates the failures of the RSZ agreement,” Mr Magande said.
Finance Minister Alexander Chikwanda last week announced that Cabinet had compulsorily acquired the concession rights that were granted to RSZ and that the management of the railway network had been reverted to Zambia Railways Limited for the first time since 2003.
Mr Chikwanda said the move had been done in accordance with Cabinet’s mandate to safeguard the interests of the people of Zambia.
He said this measure was necessary because any additional delays would have resulted in further destruction of the railway assets, thereby making it more expensive for the planned upgrade of the railway necessary for it to meet regional and international standards.
He Chikwanda charged that RSZ had “blatantly” disregarded the provisions of the concession agreement signed in 2003.
Mr Magande said he started discussing the issue of RSZ agreement in 2003 when he joined the late Levy Mwanawasa’s administration.
“Being at the centre of Zambia’s development, I realised that a weak railway system would frustrate the country’s development.
“Through SADC Ministers’ meetings and in my earlier life I had become aware that other regional countries had cancelled railway concessions for non-performance,” Mr Magande said.
According to a technical report on the review of the effectiveness of railway concessions in the SADC region for the year 2009, a number of challenges seemed to have emerged following the concessioning of some railways in Southern Africa.
Some of the challenges include declining performance in certain areas, declining state of infrastructure, massive retrenchments, reduced business cooperation amongst railways in certain areas and reduced frequencies of passenger services.
However, the States subsidies to railways had been eliminated, thereby bringing about fiscal relief to the States concerned.
“As a result of the reduced capacity of such railways, some traditional rail traffic has since moved on to the road, causing immense damage to road pavements.
“The concessioned railways in the SADC region were each evaluated to determine if performance, both operational and financial, had improved since concessioning. Reasons for failure to achieve expectations were also examined,” the report states.
It states that several common causes were found in those concessions believed to be most lacking in performance. –
“Failure to enact enabling legislation and to establish a railway regulator prior to concession. This was found to be the case in Zambia, Mozambique and Malawi.
“To a lesser extent the same was true in Zimbabwe, but that concession is unique in its concession process,” the report states.
The other problem examined was failure to have a clear understanding of the roles and responsibilities of the concessionaire and Government as relates to infrastructure rehabilitation and investment.
This was found to be the case in Zambia, Mozambique and Malawi.
“In the absence of enabling legislation and regulator, several concessions depended upon contract language to govern concession obligations. In most cases the contract language did not anticipate every circumstance and eventuality that might,” the report states.
Source: http://www.times.co.zm
