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Ministry of Transport and Communications (MTC)
Loan Authorisation Bill, Number 11 of 2012.
28/03/12
Minister Molefi prsesnts Loan Authorisation Bill, Number 11 of 2012 to Parliament

1. Madam Speaker, I have the honour to present to this Honourable House for approval, the ‘Kazungula Bridge Construction Project, Japan International Cooperation Agency (Loan Authorisation) Bill’, Number 11 of 2012. The purpose of the Bill is to enable the government to raise a loan for part financing the project.

2. Madam Speaker, the objective of the Kazungula Bridge Project is to link countries in the southern part of the Sub-continent with those in the North by constructing a Bridge on the border between Botswana and Zambia, which lies at the confluence of the Chobe and the Zambezi Rivers. Traffic traversing the water and crossing the border is currently served by ferries operated by both countries, but these are not reliable as traffic is delayed on a daily basis.

 

3. It is envisaged that the Bridge will reduce transit time at the border. Currently it takes an average of thirty hours (2.5 days, based on a 12 hour day operation) for trucks to cross the border and this is expected to be reduced to two hours upon completion of the bridge. Vehicle operating costs are to be reduced by US$ 3,756,367 for passenger vehicles and US$ 2,350,100 for trucks per year by the year 2020. The expected time savings amounts to US$ 1.4 per vehicle/hour for private cars and US$ 11.1 per vehicle/hour for buses and another US$ 2.45 per vehicle/hour for trucks.

 

4. Other benefits are improved regional connectivity of the North South Transport Corridor, regional integration of the economies in the Southern African Development Community (SADC) region, improving trade competitiveness and creation of employment opportunities. The project is expected to employ up to 500 people during construction and another 100 people to operate and manage the Bridge after completion.

 

5. The project consists of a road and rail bridge, border facilities and access roads. The border post will be a one-stop border facility operated by both countries in order to provide better and faster service. The short rail component will be constructed in anticipation of the implementation of the Mosetse-Kazungula rail line that will connect Botswana and Zambia.

 

6. Madam Speaker, some negative impact on the environment is anticipated and therefore mitigating measures will be undertaken. The mitigating measures include: construction of temporary and compliant waste and pollutants storage, as well as disposal facilities; monitoring of river contamination; re-vegetation where necessary; and locating the construction site camps away from flood lines and alluvial sediments during construction. There will also be a need to resettle residents of the village near the river on the Zambian side of the border.

 

7. The two countries have agreed to participate in implementation of the project by way of a Sponsors Agreement which has been drawn up and agreed upon. Our Cabinet has authorised the Ministry of Transport and Communications to sign the agreement.

 

8. Madam Speaker, various financiers being African Development Bank, European Investment Bank, Chinese Exim Bank and Japan International Cooperation Agency (JICA) had shown interest in financing the construction phase of the project. We however opted for assistance from JICA because the terms of their loan were more favourable than others. In addition to the loan, JICA has pledged to provide to Botswana technical assistance worth US$ 6 million, which will cover capacity building in the form of project management, and operations of the one-stop border post.

 

9.     The total cost of the project is estimated at        US$ 272.81 million (about P 1.967 billion). The two partner countries will co-finance the project on an equal cost sharing basis. To meet its part of the funding, it is proposed that Botswana Government raise a loan of 8,735,000,000 Japanese Yen (approximately P833 million) to part finance the project. The remaining balance of P150.6 million will be contributed by the Government of Botswana from domestic resources.

 

10. Madam Speaker, the negotiated terms of the loan are as follows:

a.  A fixed interest rate of 1.2% per annum;

b.  A commitment fee of 0.1% charged on the outstanding loan balance;

c.  A repayment period of 17 years (excluding grace period); and

d.  A Grace period of 6 years.

 

11. The grant element of the project is 66 per cent, which exceeds the international minimum criterion of 25 per cent. The terms of the loan are therefore concessional.

 

Madam Speaker, I move that the ‘Kazungula Bridge Construction Project, Japan International Cooperation Agency (Loan Authorisation)’, Bill Number 11 of 2012, be read for the second time.

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