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OVER E32BN RAIL LINK PROJECT TO COMMENCE

27/09/2022 08:49:00 Mhlengi Magongo

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MBABANE – A rail link project with an estimated value of E32.3 billion has been listed as part of the country’s economic growth forecast projects.

The project entails the construction of a 150km long new railway line from Lothair (South Africa) to Sidvokodvo in Eswatini, that will provide a strategic rail link with the ports of Richards Bay and/or Maputo. As well as the development of the Mpaka Inland Container depot (ICD). The Greenfield (ICD) project requires a 22 000m² hardstanding for container staging office buildings, weighbridge and warehousing.

Projects

The estimated cost of the projects was US$1.8 billion total, with the rail link costing US$1.2bn (E21.6bn) and the ICD costing US$0.6bn (E10.8bn) and the mean internal rate at return (IRR) value as 14.6 per cent at phased approach. This project is a joint inter-railway strategic initiative between the railway companies of the two countries, Transnet and Eswatini Railways. The Eswatini Rail Link (ESRL) is a seamless regional railways network running across three countries, South Africa, Eswatini and Mozambique. Eswatini Investment Promotion Authority (EIPA) Chief Executive Officer (CEO) Sibani Mngomezulu, said the feasibility study completed for the rail link and resettlement of the 235 projected affected homesteads was required. Mngomezulu said the construction of the hardstanding was completed in May of 2022 and the access road paving was yet to be done and that there was a need for funding to complete the rest of infrastructure.

The CEO said the funding would be raised on the strength of the take or pay offtake agreement to be signed between the Special Purpose Vehicle (SPV) and each railway entity. He said the two railway entities would be charged a track fee by the SPV for utilising the railway line that has been constructed with the funding raised by the SPV. “Economic activity is expected to accelerate, with mining, agriculture and manufacturing continuing to increase its contribution to the (GDP),” he said. The CEO added that approximately 5 000 job opportunities during construction for 36 months and 263 new permanent jobs during operations would be availed by the project.

Benefits

Other benefits included the decongestion of traffic at the border and the creation capacity of up to 45mtpa for General Freight export. Mngometulu added that business opportunities have also availed themselves for construction industry and small medium enterprises (SMEs) to provide outsourced services. He also said an improved logistics chain, direct rail access to the RSA economic hub, to promote intra African trade and integration of the region’s freight logistics would not be excluded. He said the project would further increase the movement of import and exports, which also provide a shipping hub in proximity to the sugar belt of Eswatini. “Appeals to the businesses in the Lowveld, the Maputo Port and the North-South for corridor developments in close proximity to KMIII International Airport have been made,” he said.

Movement

The CEO mentioned that the station was already listed as a bonded station by Eswatini Revenue Service (ERS), promoting ease of doing business, economical and safe movement of goods through the terminal as well as competitiveness of Eswatini in regional trade. Mngometulu added that government had also supported the project by providing land for the construction of the railway line and government beared the expenses for land acquisition and pre-construction activities. The need to attract higher and sustainable level of direct investment flows is imperative to the business sector of Eswatini. This would not only increase investments but would also avail the opportunity for businesses to expand in terms of trade and market availability. Higher levels of direct investment flows contribute to the growth of industries like manufacturing, textile, processing and construction.

Khanyisile Dlamini, Eswatini Investment & Trade Promotion Authority (EIPA) Senior Executive Manager, Investment Promotion yesterday said the need to attract higher and sustainable level of direct investment flows can be done through Common Market for Eastern and Southern Africa (COMESA). The senior manager was speaking during the revised COMESA Common Investment Agreement (CCIA) framework public awareness workshop at Emafini Country Lodge.

Growth

Dlamini said trade and investment are vital drivers of economic growth. She said foreign direct investment had become a key element of trade between different countries. “It has been realised that direct investment is an important source of finance for sustaining the pace of economic, industrial, infrastructure and technology development,” she said. The executive mentioned mergers and acquisition as well as growth in international project finance makes it possible for investments within COMESA. She said as a country, they need to change the way they do business and attract investors. “We need to promote regional access, attract investors from the region,” she said. Dlamini also mentioned The CCIA would enhance COMESA’s attractiveness and competitiveness for promoting foreign direct and cross border investments. “All along we have been advocating for our business to trade with the trade blocs, including COMESA, now through the CCIA we will promote investing in COMESA,” she added.