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E30BN RAIL LINK PROJECT AWAITS INVESTORS

02/12/2022 08:46:00 Mhlengi Magongo

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MBABANE – A rail link project with an estimated value of E30.3 billion has been listed as part of the country’s economic growth forecast projects.

The project entails the construction of a 150km new railway line from Lothair (South Africa) to Sidvokodvo in Eswatini which will provide a strategic rail link with the Richards Bay and/or Maputo ports. The development of the Mpaka Inland Container depot (ICD) Greenfield project requires a 22 000m² hardstanding for container staging office buildings, weighbridge and warehousing. The estimated cost of the projects was US$1.8 billion (E30 287 682 504) total, with the rail link costing US$1.2 billion (E21.6 billion) and the ICD costing US$0.6 billion (E10.8 billion) and the mean 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.

Network

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 a feasibility study completed for the rail link and resettlement of the 235 projected affected homesteads would be required. Mngomezulu said construction of the hardstanding was completed in May 2022 and the access road paving was yet to be done. He said there was a need for funding to complete the rest of the infrastructure. The CEO said the funding would be raised on the strength of Take or Pay Offtake Agreements 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 work opportunities during construction for 36 months and 263 new permanent jobs during operations will be availed by the project. Other benefits include the decongestion of traffic at the border and create capacity 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 outsources services.

Improved

Further, Mngomezulu 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. The CEO mentioned that the station was already listed as a bonded station by Eswatini Revenue Service (ERS), promoting the 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 the government has also supported the project by providing land for the construction of the railway line and government bears 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 will not only increase investments but 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, EIPA senior executive manager, investment promotion 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.

Dlamini said trade and investment were vital drivers of economic growth. She said foreign direct investment had become a key element of trade between different countries.

Important

“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 which made it possible for investments within COMESA. She said as a country, they need to change the way they did business to attract investors. “We need to promote regional access, attract investors from the region,” she said. Dlamini also mentioned that 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.