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Thursday, January 27, 2022

PF Government Signed 1,005 Road Contracts Valued at K127.61 Billion in 10 years

Headlines PF Government Signed 1,005 Road Contracts Valued at K127.61 Billion in 10...

The government in the last 10 years signed road contracts valued at K127 billion without a clear foresight on how these commitments would be liquidated, Parliament has heard.

Meanwhile, as at 30th June, 2021, arrears payable to contractors and consultants accumulated to K9.68 billion.

Delivering a ministerial statement on the debt status of the road sector, Finance Minister Dr. Situmbeko Musokotwane revealed that the government further obtained expensive loans from NAPSA and NATSAVE valued at K4.2 billion as a way of raising funds, but these initiatives did not clear all the arrears to the huge over-commitment.

Dr. Musokotwane says the total arrears plus the loans brings the total to K14.7 billion dollars as of 30th June 2021.

He says this approach is unsustainable and that his Ministry directed the National Road Fund Agency in consultation with other road sector agencies to develop a ten-year debt service sustainability plan which will outline how the government will implement road infrastructure in a more sustainable manner.

Dr. Musokotwane said if approved by Cabinet, the debt sustainability plan will ensure that government does not incur debt unnecessarily without any viable repayment plan beginning in the year 2022.

Below is the full statement

MINISTERIAL STATEMENT ON THE ROAD SECTOR DEBT STATUS AS AT 30 JUNE 2021

1. Madam Speaker, I wish to thank you for giving me this opportunity to brief the House on the Debt status of the Road Sector. I wish to start by giving a composition highlighting the five main key players in the road sector.

2. Madam Speaker, the five main players are as follows:

1) National Road Fund Agency (NRFA) falling under the Ministry of Finance and National Planning;

2) Road Development Agency (RDA) falling under the Ministry of Housing Infrastructure and Urban Development;

3) Road Transport and Safety Agency (RTSA) falling under Ministry of Transport and Logistics; and,

4) Ministry of Local Government and Rural Development (MLGRD); and,

5) National Council for Construction (NCC) under the Ministry of Housing Infrastructure and Urban Development.

3. Madam Speaker, the Road Development Agency is responsible for the procurement and implementation of road works in the country.

In collaboration with the Ministry of Housing Infrastructure and Urban Development, the Road Development Agency (RDA) signs contracts with various contractors for major road works mainly on trunk, main and district roads including bridges.

The Ministry of Local Government and Rural Development is responsible for feeder and urban roads in the country.

The National Road Fund Agency (NRFA) is responsible for funding of the road works.

4. Madam Speaker, funding to the road sector in Zambia is derived from both local and external sources.

The local funding source includes fuel levy, inland and port of entry tolls, road license fees, registration and examination fees, weighbridge fines. The external funding is derived from loans and grants from co-operating partners such as the World Bank, African Development Bank, #European Union, funds from contractors financing initiatives and public private partnerships.

5. Madam Speaker, during the last ten (10) years, Government signed road contracts valued at K127 billion without a clear foresight on how these commitments would be liquidated.

As at 30 June, 2021 arrears payable to contractors and consultants accumulated to K9.68 billion.

Further, Government obtained loans from NAPSA and NATSAVE valued at K4.2 Billion as a way of raising funds, but these initiatives did not clear all arrears due to the huge over committment.

6. Madam Speaker, the breakdown of all the contract commitments, debt arrears, and loans as at 30 June, 2021 is as follows:

CONTRACT COMMITMENTS

1) Road Development Agency (RDA) has 690 running contracts valued at K111.46 Billion.

2) Ministry of Local Government and Rural Development (MLGRD) has 315 contracts valued at K16.15 Billion.

3) The contract commitments is therefore 1,005 contracts and valued at K127.61 Billion.

A total of K 9.68 Billion is also owed to contractors as debt arrears.

7. Madam Speaker, the following are the commercial loans obtained by (NRFA) totaling to about K5.06 Billion:

1) NAPSA loan, K 3.8 Billion;

2) First NATSAVE loan, K260 Million;

3) Second NATSAVE loan, K500 Million; and,

4) INDO-ZAMBIA loan: K500 Million.

Further, Madam Speaker, the total of arrears plus loans as at 30th June, 2021 is K14.7 billion.

8. Madam Speaker, it is clear that this approach is unsustainable and obviously requires serious adjustments. My Ministry has therefore directed the National Road Fund Agency in consultation with other road sector agencies, to develop a ten (10) year Debt Service Sustainability Plan (DSSP) which will outline how Government will implement road infrastructure in a more sustainable manner going forward.

This ten (10) year plan will:

1) Prioritise payments of all debt arrears due to routine maintenance, small and medium contractors and thereafter ensure timely monthly payments to all routine maintenance contractors.

2) propose the refinancing mechanism of the costly NAPSA and NATSAVE I loans within the next six (6) months, which will result in significant savings when all loans are fully repaid within five (5) years.

3) prioritise the planning and provide adequate funding towards implementation of periodic maintenance and rehabilitation road works, before considering the costly upgrading over the ten (10) year period.

4) Prioritise the annual planning and provide adequate funding for implementation of 80% complete upgrading road projects for completion within the first two years of the ten (10) year period.

5) Propose to the implementing agencies, RDA and MLGRD, immediate termination of the dormant road contracts, to stop the intangible costs, such as interest claims on delayed payment of interim payment certificates (IPCS). The termination costs will be part of the debt arrears in the DSSP.

9. Madam Speaker, the 10 year debt service sustainability plan will in addition propose an overall suspension for the debt arrears, in terms of:

1) The proportion redeemable through the road sector ten (10) year annual work plan;

2) The proportion likely to be suspended now and to be redeemed during the second five (5) years, thus after all the five year loans above have been fully redeemed;

3) The proportion which could be negotiated at sovereign level; and,

4) The proportion which could be a candidate of the medium to long term bonds till adequate funding is available to redeem fully the arrears.

10. Madam Speaker, the Debt Service Sustainability Plan, if approved by Cabinet, will ensure government does not incur debt unnecessarily without any viable repayment plan beginning the year 2022.

My Ministry will table the debt service sustainability plan for cabinet approval before 31st December, 2021.

11. Madam Speaker, The Public Private Partnership (PPP) Unit under the Ministry of Finance and National Planning has been directed to immediately engage RDA and NRFA to identify potential road projects across the country that could be financed and implemented under the PPP arrangement.

This is expected to create relief on the Treasury going forward.

12. Madam speaker lastly but not least, the National Road Fund Agency in collaboration with RDA and MLGRD has been guided to develop a transparent, effective and fair payment mechanism for the period October 2021 to December 2021, in line with the National Road Fund Act Number 13 of 2002.

Going forward, with this system in place, I do not expect contractors owed to lobby for payments as this is breeding ground for corruption which the new dawn Government shall not tolerate at all costs.

I THANK YOU, MADAM SPEAKER

Delivered by:

Dr. Situmbeko Musokotwane, MP
Minister of Finance and National Planning.

32 COMMENTS

  1. That’s exactly why people voted for you.. to correct, improve and move on as you kept on promising them. Don’t use the PF misrule for the failure that you seem to anticipate.

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  2. Kikikikikk 4 months into office and they’re still day dreaming about PF ……so these guys have failed…..bwahhhhhha…..no power and fuel in Lusaka

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  3. 1005 road contracts. How many were actually completed? And when will the remainder be completed? I have a funny feeling that the potholes in the road passing my farm will remain potholes for some time……..

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  4. The most useless corrupt GRZ ever to have ruled zambia, as people will find out………

    When we used to tell you that lungu is not fit for purpose, you called us haters……..

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  5. This was a Ministerial Statement to the National Assembly on road sector debt status.

    I believe the Minister is justified in making reference to how government (under PF) contracted the debt, and how the current government plans to service the debt.

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  6. PF IS ALL BUT DEAD AND BURIED
    TELL US WHAT YOU GOING TO DO ABOUT IT
    WE NOT INTERESTED IN WHAT THEY DID
    BUT HOW ARE YOU GOING TO CORRECT IT

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  7. Sir, You are attacking all the good things that PF did. You must learn to appreciate. Your President said he cannot fly on that jet because it was too expensive. In the meantime he is also flying from the new KK airport which he also said was too expensive. On his way from the Community house he drives on the newly refurbished Mosiotunya road grom the ring road… another “very expensive” road. Your minister was at the conference center being constructed at Mulungushi….. He had full of praise. I hope you guys was step a foot in that place because it is too expensive! Frank Tayali went the new Simon Mwansa Kapwepwe Airport and was marvelled at what ECL has done there. Hope you guys will continue landing at the old Ndola airport because the new one is too expensive. PLEASE…

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  8. And who told you that the dual carriage road from Chingola to Mutanda is a priority for the people of western province? What we need are township
    roads, Solwezi kipushi road and Solwezi Mwinilunga road. Please forget this idea of the dual chingola -Solwezi Road. PF has already done that road.

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  9. There is need for the New Dawn Govt to do more serious investigations and tell the nation which people were behind such procurement. Its clear there is still a clique of plunderers who chewed with both hands. Does it mean there were no competent people to advise that certain procurements had to be put on hold/ There is need to round up all professionals involved consultants, supervising engineers, contractors, procurement officers, auditors/accounts at NRFA and RDA and politicians they should be charged with economic sabotage. Its so disheartening to see such things taking place in a normal functioning govt. Whilst in Somalia people are killing each other over control of the country but in Zambia under PF we had a clique of few individuals milking the country up to the bone whilst the…

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  10. Are you telling me you will stop or slow down on road making? This will be a joke Zambians wont tolerate come 2026. You claim PF over priced the contracts, we know it was a good thing for this country for roads to be made, why don’t you continue and control the costs?

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  11. #7 When a man marries a widow with numerous children, he must have known how to handle his new situation before committing himself.

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  12. As usual Saulosi prefers to put his head in the sand and post his usual claptrap…you see how money was wasted under your Lazy Lungu and his reckless ministers just look at how much money was routed to NW province almost zero yet it’s a big earner of the whole country….shame on you!!

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  13. Deja Vu, but the same man who has married a widow with 7 children when asked by his friends why he is unlikely to put money into the beer drinking pool should say; “ I have issues to manage now. Look, my newly married wife has 7 children. The first is in grade 12, third in grade 9 and last in pre-school. This is how I intend to manage their education going forward……..sorry friends, you will not be seeing me at the beer joint like the deceased father to the children that I now look after used to do! The gentleman would drink a day long but would not have any thing to do with family planning. Besides my wife, he has left other women with more children that we are just getting to know about.”

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  14. So the New Dawn government wants to cancel a number of the contracts that haven’t been paid. What about the poor contractors who have been waiting for their money for so many years? The work was completed, so government must pay up, even if it’s years ago

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  15. Zambians should know that there will never be a perfect President. And therefore the best will can do is learn from what is gone and make necessary correct where things went wrong. Complaining and repeated focus on the blame game won’t help matters. Take a look at other war torn African countries and you will appreciate that Zambia is a good environment to trade and interact freely.
    Pasumwengu

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  16. PLEASE BA NEW DAWN WORK ON ECONOMIC ROADS EVEN IF IT’S A FEEDER ROAD OR TOWN SHIP ROAD AS LONG AS IT IS ECONOMICALLY VIABLE.
    LOOK AT CENTRAL STREET AND CHIBULUMA ROADS IN KITWE THESE ROADS ARE HELL RUN. AND YET MANY TRUCKS THAT FERRY COPPER AND OTHER GOODS ON THAT ROAD ALL PAY ROAD TOLLS TO RTSA AND TOLL GATE FEES TO NRFA. WHY PUNISH TRUCKERS WHO CONTRIBUTE MORE MONEY TO THE TREASURY? SINCE PF GOVT TIME THESE ROADS HAVE NOT BEEN WORKED ON. IT’S HIGH TIME THEE ROADS WHERE MARKED FOR REHAB.

  17. These are very few. They should have borrowed more to make more roads. I cant imagine how great East would have been looking without this initiative. I can’t imagine how most of the roads would have been without this great initiative by pf. The entire Lusaka would have been looking like a ghost town full of Port holes. Well done PF. I actually wanted you to continue so that Zambia is developed. We have had Chiluba, Mwanawasa, RB who did very little to develop our roads, schools, hospitals etc. Where was the money going? Did they end poverty? The idea of borrowing for infrastructure was excellent because I have benefited. Just a few metres away from home there is a beautiful road and the tear and ware on my car is no more. Iam now saving on car repairs. If UPND stop building roads and…

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  18. And out of the K127 billion the actual cost of those roads would be K27 billion. The other K100 billion was for people’s pockets.

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  19. As long as it wasn’t hidden, that’s fine, infact extremely very fine.
    Now get to work. True, this should not be used as a precursor to failure. No excuses.
    Anso you must work. You think Governing should be taken with kids gloves? All that time u5 was busy discrediting the previous Government. It seems this will continue but youths want their jobs, citizens want cheap fuel to drive on good roads.
    Get the hell to working. Sha!
    Chiputa bati!

  20. As long as it wasn’t hidden, that’s fine, infact extremely very fine.
    Now get to work. True, this should not be used as a precursor to failure. No excuses.
    Anso you must work. You think Governing should be taken with kids gloves? All that time u5 was busy discrediting the previous Government. It seems this will continue but youths want their jobs, citizens want cheap fuel to drive on good roads.
    Get the h.e.ll to working. Sha!
    Chi.pu.ta bati!

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  21. If they paved those roads then job was done now it is your work to see that those roads remain passable this work of governance is a continuous and progressive work one government gone the other one takes over that is how it works.
    Even after building a house you have to continue repairing it if people are living there or even if no one is there age catches up so repairs is part of the work.
    Roads die when there is no repairs there are roads in townships which are not maintained they are dying.

  22. This chap musokotwane ran the ministry of finance with ‘good’ figures on paper but the country was languishing in dilapidated infrastructure like US beaten Baghdad.
    It appears good economics on paper doesn’t support infrastructure building.
    Tell me which good civil Engineer local or abroad will build you a glamorous road, bridge or skyscraper for peanuts. Easier said than done. You claim a kilometer of road should not cost this or that much. Will you dictate your way to building? Sick economists. This is where an Engineer despises a Business man.

  23. The Minister Must Give also the Funding and Financing methods that their colleagues That is to say the Mechanisms for Financing Roads in Tolls and other Pay as you Go was well thought I am sure the minister could have done better to give also the Funding GAP in those measures rather than simply give valuations that could vary and cost more if cancelled in most cases Such methods like Tolls and Pay as you Go

  24. @ 20 Maano

    “So, who Constructed the Infrastructure?

    a. The PF that Borrowed the Money.
    b. The UPND that Pays the DEBT.”

    Answer: Non of the above. The PF did not borrow any money and the UPND will not pay any debt. Its the Government of the Republic of Zambia that borrowed the money and its the same government that will pay. Hope that answers the question.

  25. “So, who Constructed the Infrastructure?

    a. The PF that Borrowed the Money.
    b. The UPND that Pays the DEBT.”

    Answer: Non of the above. The PF did not borrow any money and the UPND will not pay any debt. Its the Government of the Republic of Zambia that borrowed the money and its the same government that will pay. Hope that answers the question.

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