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Govt will get $2.03bn loan from China for Chipata-Serenje Railway project, reveals MinisterBy Sipilisiwe Ncube on 15 Nov 2019
Housing and Infrastructure Development Minister Vincent Mwale says government is in the process of obtaining a financial loan agreement of US $2.03 billion from the Exim Bank of China to commence the constrction of the Chipata-Serenje railway line.
And Mwale says China Civil Engineering Construction Corporation was single-sourced for the project as one of the terms of the agreement.
Responding to a written question by Mkaika MMD member of parliament Peter Phiri, who wanted to know when the construction of Chipata-Serenje Railway Line would commence and who the contractor for the project was as well as the cost, Mwale said: “Construction of the Chipata-Serenje railway line will commence after financial closure is reached between government and the Exim Bank of China. The contractor is China Civil Engineering Construction Corporation. As at 2018, the total estimated cost of the project was US $2.03 billion.”
And responding to Katombola UPND MP Derrick Livune who asked the minister what the economic value of the project was, Mwale said it would ease exports and imports among others.
“Mr Speaker, this project is important in that it is going to link Chipata-Muchinji railway to the TAZARA railway line, basically connecting one corridor to the other. We are going to have Great East Road connected all the way to Dar-Es-Salam. There is so much value in that it will help ease exports and imports but at the same time reduce the burden that government has, spending money repairing roads that are so costly and easily get damaged because of goods that are transported through the road,” he said.
But Liuwa UPND member of parliament Situmbeko Musokotwane wondered why government wanted to borrow more.
“Minister, today the government owes more than US $10 billion dollars and because of this heavy indebtedness, we are failing to provide basic services in the country including absence of teachers and so forth. Are you intending to borrow another US $2 billion on top of what we already owe?” asked Musokotwane.
In response, Mwale said the Ministry of Finance would advise if the new debt could be sustained or not.
“Mr Speaker, the desire of government is to have this railway line done and the Ministry of Infrastructure will have to oversee the construction. But whether or not we are in a position to borrow really lies squarely on the shoulders of the Ministry of Finance and the treasury. They will advise after assessing our debt situation whether we can sustain this debt or not,” he said.
Meanwhile, Chembe PF member of parliament Sebastian Kopulande insisted that the minister explains the economic value of the project.
“Honourable Minister, before a huge project of the value of US $2 billion dollars can be undertaken, there should have been a feasibility study that should have been conducted. If indeed a feasibility study had been conducted, minister, can you provide a clear answer to a question from the member of parliament for Katombora as to what economic value this project to this country is? If it is more complicated, can we make it more easier [for you] that what is the total value of trade that will conducted by use of this piece of infrastructure?” Kopulande asked.
In response, Mwale said the project had so many benefits including that of connecting the Nakara corridor to the Northern corridor.
“Mr Speaker, a feasibility study was indeed conducted and the [economic] value [which] I am referring to is concluded by the fact that we did a feasibility study to check whether this was viable, this was important to the nation and that this was going to give us those benefits of connecting the Nakara corridor to the Northern corridor, and that is what came out from that feasibility study,” Mwale said.
Kabompo UPND MP Ambrose Lufuma asked the minister to explain whether or not it was possible to do away with the project, considering the economic crisis which the country was in.
In response, Mwale said the economic crisis had slowed down the loan agreement process.
“Mr Speaker, I said that the reason [why] we haven’t commenced this project was because we haven’t reached a financial closure with the Exim Bank and the reason we haven’t reached a financial closure is because at the moment, there is no space for us to be able to borrow, meaning are already delaying because of the current situation. This would have commenced some time back. So there is no closure because both the Exim Bank and ourselves know that this is a lot of money and maybe we can live for the time being without but should there be some space, maybe that closure will be reached and the project will commence,” Mwale said.
And when responding to a question from Livingstone UPND member of parliament Mathews Jere who wanted to know whether or not the contractor was single-sourced, Mwale said single-sourcing was inevitable for this project.
“Mr Speaker this is an EPC+F project. It is a contractor financed loan. So, the contractor came with the financing and in such cases, single sourcing is inevitable because they bring the money,” said Mwale.
About Sipilisiwe Ncube
Sipilisiwe Ncube has a background in radio news.
Email: sipilisiwe [at] diggers [dot] news
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