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Ministry of Transport and Communications (MTC)
2013 COAL BOTSWANA CONFERENCE
26/04/13
Hon. Nonofo E. Molefhi: The Way Forward For Trans-Kalahari Railway Link – Taking Imminent Decisions.
1. It is an honour and privilege to be invited to give a keynote address to this august Coal Botswana 2013 Conference. I have been asked to speak on: The Way Forward for Trans-Kalahari Railway Link – taking imminent decisions. 2. Allow me, chairman to extend a special welcome to my colleague the Minister of Works & Transport, from the Republic of Namibia, Honourable Erkki Nghimtina, who has believed in this project which will open alternative trade route from Botswana. 3. The idea of building a railway line across the Kalahari dates back to the 19th century. This has been revisited over the years. In the late 1970’s, it was examined as part of a scheme to export Botswana’s coal via an Atlantic Ocean port in Namibia. However, that scheme did not take off, partly because world coal prices were not high enough compared with the costs of production and transportation to markets. 4. Overall, the lack of effective trade activity locally, regionally and globally – has meant that until now there has been insufficient traffic to justify the development of the TKR. 5. In recent years however, the prospects for developing feasible railway lines have improved, mainly because of: • Conducive political developments within the Southern African Region; • Increased emphasis on trade as an engine of economic growth; • Congestion and inadequate capacity in the region’s existing port facilities and rail links serving them has increased the attractiveness of alternative transport outlets; • Increased emphasis on regional cooperation to develop competitive cross-border transport links; • Increase in the demand the coal resource and attractive world coal prices which has led to the initiation of major coal mining projects in Botswana; • Interest expressed by the private sector to finance, construct and operate railway projects; • Increased opportunity for economic diversification and value add to the range of resources and prospects for enhanced regional integration agenda. 6. In view of the foregoing, the Governments of Botswana and Namibia, initiated a scheme of conducting the Pre-feasibility Study of the Trans Kalahari Railway (TKR) Line. In this regard, the two Governments signed a Memorandum of Understanding in 2010. 7. The MoU paved way for a prefeasibility study for Trans-Kalahari Railway and Port. The Study included two other rail links, which are: (i) Mosetse–Kazungula, which would for the first time connect the railway networks of Botswana and Zambia; and (ii) Mmamabula–Lephalale, which would provide a new northerly link between the railway networks of Botswana and South Africa. A Canadian Consultant, CPCS Transcom Limited conducted the study, which they concluded in 2012. 8. Although the development of the Trans Kalahari Railway line is intended to provide through transportation solutions for Botswana’s exports and imports through ports in Namibia, the scope of the project was not limited to construction of a rail link. The overall TKR project is likely to include construction of a rail link or links, augmentation of existing railway infrastructure, provision of specialised terminal facilities at either end of the TKR and expansion of deep water port facilities in Namibia. 9. During the Study of the TKR, the Consultant examined numerous rail route alignments between Botswana and Namibia, including port sites in Namibia, and forwarded recommendations in respect of route alignment, gauge type and mode of investment. 10. The implementation of this project is envisaged to bring huge benefits to both Botswana and Namibia through efficient facilitation of their trade and creation of huge employment opportunities. This Project is expected to contribute to economic diversification, employment creation and poverty alleviation which are the major strategic objectives of Botswana’s economic and social development. 11. Key decisions that have been made on the project include: a) The two Governments have recognised the need to involve private sector in this project; and would like for the private sector to take a leading role in funding, designing, building, operating the TKR and Port. We believe that this is what the mining community and their off-takers will want in order to have a grip on the logistics costs which for this length of line may be significant. I am therefore happy to invite you to show interest and put proposals forward to develop this project. b) The rail route alignment to follow Trans Kalahari Road Corridor through Gobabis to Walvis Bay. It has been found that this among others will minimise delays and costs which may result from land acquisitions, resettlements, adverse environmental issues, etc. c) We have further agreed that time has come, and as Governments we must reduce our discussions into a more formal Bilateral Agreement for the Development of Railway line and Coal Port. This Agreement should be signed in April 2013. We believe this will assure you the private sector of the seriousness of the two Governments to work with you to deliver this Project. d) The Governments will endeavour to remove any existing legislative impediments that may hamper the speedy deliver of the Project. Key, is the deliberate decision to forge links between Botswana Railways, TransNamib and Namport under a special purpose vehicle but not affecting their existing in-country operation. This will assure the investors of a one-stop shop and a single regulatory body for this bilateral railway and port infrastructure. e) Further, it has been agreed that where there is enough appetite for the project and recognising the magnitude of the project, selective method of procurement will be considered, such that interested consortiums may start engaging with the Governments’ representatives. 12. The above is a true illustration of the strategy nature of this Project to the two Nations. Please join us in making this project real. We can and we should deliver TKR before LONG, if we are all to realize the benefits it holds for us. “US, I mean you private sector (investors) and Governments and publics at large. Remember, the anchor commodity for this project is COAL; Coal is a bulk product; Coal is Price sensitive; Coal has competition and it can be substituted. 13. The coal prospectus must come to the party by going beyond prospecting to serious engagement with potential developers by forming mining/transport and logistics consortia to ensure that the timing for mining commencement and rail port development are well coordinated. The Ministry responsible for mining licences should monitor the activities of those holding permits not to hold back the projects unduly. 14. A lot is at stake as a consequence, we have set up a Coal Development Unit in the Ministry of Minerals, Energy and Water Resources to coordinate the coal/rail development projects. The purpose is to create harmony between transport and logistics and coal mining. 15. As part of the project, the route in Botswana has been determined; consultation with Land Authorities and local Political leadership has been completed. The remaining preparatory consultation is with affected communities (directly) along the route corridor. The route will traverse through agricultural zones – arable and pastoral zones. These discussions with the affected will help generate compensation threshold to be used by prospective developer for the rail line. 16. The window of opportunity for coal export will not last forever, it is fleeting. It is therefore important that we seize the opportunity now by galvanizing the capacity of the private sector so that they too contribute to the economic diversification drive. I THANK YOU.
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