A consortium of American investors has threatened to withdraw its $400 million financing for the North West rail Project.
This follows the reluctancy by Mining giants Lumwana and Kansanshi to sign a committment agreement for the use of the rail line set to be completed in 2010.
North West Rail Limited Chairperson, Enock Kavindele disclosed this in an interview with ZNBC news.
Mr. Kavindele appealed to the government to help entice the two mining companies into using of the rail track.
Last week, Finance Minister, Ng’andu Magande said government is ready to assist in the rail project if there are any financing problems.
HE said this is because government appreciates the economic significancy of the rail project.
Why Gov? these two giants must see economic sense in the project first before they can commit to it, i bet thats how it works. Whats in there for them, transport issues aside.
I guess the mining companies do not want to tie themselves into transport rates that may prove disastrous in the long run. It is also possible that they view the rail-line as a dangerous monopoly that would charge any rates it wanted given the fact that there is no GRZ participation to absorb any anticipated losses by the transporter in the times when mineral prices drop below these dreamland prices we are experiencing at the moment.
Y shud govt be involved in yo deal Enock Percy Kavindele? I give u credit 4 outstanding business deals u clinch tho
so what is scaring the mining giants? We need to hear more of the conditions attached. We are not going to support exploitation just because a rail network sounds good for Zed. We are not on your side 100% Do genuing business and you dont have to issue such threats of pulling out. Afterall, yours is investiment to last forever, beyond the life span of the mines, why are you in a hurry to recover costs by making the rail so expensive to use if that is the case!
sumthin’ doesn’t make sense here.the railway will give the “infestors” the cheapest option of transportation which has already been identified as a bottleneck.if the plans on the table reflected this, why is the issue of govt. guarantee/participation a stumbling block? if this “private initiative” is as good as we are led to believe there should be no problems.i see the “infestors” wanting a railway owned by govt and themselves excluding EPK probably due to his tarnished image in international business.
committment of $400m poses a significant risk and the if ownership is private they will be at the mercy of a partner who is solely motivated by profit whereas govt will behave in a manner consistent with long term developmental aspirations for the area.after the goal post changes(windfall tax etc)the risk factors of any future investment in Zambia is increased.EPK is being squeezed out of this deal with govt. being the preferred partner.The injuries EPK inflicted on Isuzu,IBM etc have come back to haunt him!!
the well documented indecision,inappropriate political gymnastics and poor big business record is costing EPK a chance to redeem himself.this railway will go ahead but i bet my bottom dollar it will be without EPK or his equity participation will be insignificant so as to minimise risk!!Cant blame the “infestors” here as dealing with “fine tuning” will always present an unacceptable business risk!!
I guess the American “infestors” are coming to construct a rail line that will contribute to the economic development of this country. What seems to be raising eyebrows is there insistence on the mining giants to sign a commitment agreement to be using it. Is it the mining companies that invited EPK to come and construct the rail line? If so, then EPK has reason to suggest that they sign the agreement. If not, am afraid the man is asking for something hidden under his table!!
“Fine Tuning” has always been a tricky fellow.why would i commit my business to using your mode of transportation leaving me without options if my circumstances change??EPK needs this guarantee to access money thats all and he is trying to use the govt to foolishly co-guarantee this!!Magande must only commit govt. money if govt own the damn thing..Magande only has taxpayers money to spend and he better spend wisely!!EPK needs the committment to assure the lenders of ability to repay as he doesn’t have collateral to offer!!
this project is TOO big for EPK to go it alone.With his blemished record and doubtful allegiances any lender will only offer the most stringent lending conditions!!He will fail and govt and/or the “infestors” will build this railway!!maybe a more credible local can get involved??
I only hope there is no hidden agenda here to squeeze out EKP because the country will lose out as well. The man took the initative when no other indegenous businessman was willing to come foward. What’s wrong with us?
nemesis(11),in big business credibility and trustworthiness is half the job done!!! if you are lacking in either, no matter how good your idea is, nobody is gonna take you seriously!!
Consider this:
i would like to buy Nitrogen Chemicals…i only have 200million kwacha,i have no big business credibility and becoz nobody knows me i’m considered untrustworthy DESPITE a perfect business plan and the relevant qualifications& experience in running a chemical plant…..do you think barclays will give me $50million without further collateral ??….i didn’t think so either!!
Somebody please appraise me on this venture.Its difficult to make any logical conclusions, much less comments, without any factual basis. The ignorance is my fault but i sure will appreciate being educated on the issue.Thank you.
Kavindele at it again. Just build the railway bwana, if it makes economic sense, the users will come, otherwise dont force people to commit to a project whose benefits they are not convinced about
Why is such a critical national development project being handled in this amatuerish manner? It is clear to me that Kavindele’s interests are short term..run the railway line while the mines are operational. Once they cease to exist, close shop! One cannot approach national development issues with such a short term mind. Unfortunately, the mmd are of the same cloth as Kavindele. At the end of the day, Zambians will be worse off. The other issue that is unspoken is that of the land over which the railway line will pass. What are the rates Zambia is expecting from the railway line lying on it? We need answers, otherwise some of us will nationalize it with peanuts to Kavindele.
#13,with the mines in the north west comes a need for an economical method of transportation for the finished goods to reach the ports.given the nature of the product,the poor existing road network,high cost of road transportation etc,a railway is most ideal.EPK,as a private initiative,was to build this railway which of course would benefit other sectors of the economy and serve as a link to the Benguela rail line to the ports in Angola and eventually to Walvis Bay.EPK is having the expected problems in financing it and he is seeking usage guarantees to satisfy potential lenders.
the main potential users of the proposed railway are jittery about committing contractually to this railway given that it is a private initiative and profit driven(understandable).the mines would rather deal with the govt. for obvious reasons (i.e stability of pricing/concessions etc etc)I hope this helps…its not an exhaustive explanation as others may fill in the gaps for the benefit of us all!!
Thanx. It broadened my spectrum. I’ll follow the blogs and read up a little more on it. Appreciate it sir!
I think that it is wrong for us as Zambians to be building more export routes for these foreigners when they are refusing to share the benefits from our minerals. Opening up more export rail routes is like opening more doors into your house to allow more thieves to come and grab your belongings and run!! We must think for our children instead of selling off everything. Without reasonable mineral royalties, increased taxes, windfall taxes, why increase the rate of outflows of our resources when there is nothing in return to the general nation? Kavindele does not represent the whole nation, but a personal bank account.
#19,if you want royalties,windfall taxes etc, you better have the infrastructure to make possible the business for you to tax!!the resources maybe abundant but you have to have a way of getting it out economically!!! being landlocked is a disadvantage in this regard.besides having an proper rail system THROUGHOUT the country would help us economically…you could live in Kabwe and work in Lusaka for instance.In many parts of Europe and the Americas a two hour train journey to work is not as crazy as it sounds, but is reality for many.in short, i disagree with your “Way to Go” !!!
#20, the mining companies have earned a hundred fold from their business in Zambia and continue refusing our newly proposed mineral tax, royalty rate and the windfall tax. Why would you want them to expand their exportation of our resources when they are this closed to our benefiting from their present and past activities?
You cannot now start crying for a proper rail system when you allowed ZR to be handed over to thugs and thieves whose contribution to our railway industry is an insult to all. In addition, we closed Zambia airways without any proper understanding of what implications were going to be to our nation.
#21,with or without the mines involvement, we need to continue the railway system development efforts.such infrastructure could encourage commercial & industrial development in the rural areas. a cost effective alternative will attract investment & industry.at the minute all industry is concentrated in existing industrial sites due to proximity to transport links.i needn’t illustrate the benefit of the industries being sited along the line of a reliable rail system.by the way,a rail line is not only for export routes but would also facilitate safer and environmentally friendly travel WITHIN the country!!