By Benedict Tembo
The Road Development Agency RDA) says the Macro Ocean Investment Consortium was selected as the preferred concessionaire to undertake works on upgrading to dual carriageway of the 327 kilometres Lusaka-Ndola road in a highly transparent manner. RDA acting director Corporate Affairs Anthony Mulowa says selection of the concessionaire for the project, which includes rehabilitation of the 45 Km Masangano- Fisenge Road was also in line with provisions of the Public-Private Partnerships (Amendment) Act no.14 of 2009.
Mr Mulowa says due process, as required by the Public Private Partnership (PPP) Act no. 14 of 2009, was followed in selecting the concessionaire and this was done in the spirit of fairness, equity and cost-effectiveness. He says the call for Expression of Interest (EoI) was published in the print media on February 16 last year and seven proposals from interested firms were received on 11th of the following month.
“These proposals were evaluated from 4th March 2022 to 21st March 2022 and two firms were responsive to the stipulated evaluation criteria and were consequently shortlisted,” Mr Mulowa said.
He said the two bidders were Macro Ocean Investment Consortium represented by AVIC International Project Engineering Company, Zhejiang Communications Construction Group Limited and China Railway Seventh Group Limited; and Yamene Financial Services represented by Velos Enterprises Limited, Graduare Property Development Limited, Yamene Financial Services Limited and Hillary Construction Pty Limited.
Mr Mulowa said in line with the provisions of the PPP Act no. 14 of 2009, the Request For Proposals (RFP) were issued to the two shortlisted firms on May 5 last year with the proposal submission deadline being 1st July last year.
“The second stage of evaluation was conducted in July 2022. On July 24, 2022, the PPP Council considered the request for approval of the due diligence exercise that involved visiting the bidders’ past project sites both local and outside the country, and the Bid Evaluation Reports for the current project,” he said.
Mr Mulowa said Macro Ocean Investment Consortium were then conferred with the preferred bidder status in line with the PPP Act no. 14 of 2009.
“After the evaluation of the proposals, a Government negotiating team was duly constituted, with wide spread representation from various ministries, departments and agencies.
In line with the provisions of the PPP Act, the Government entered into a Concession Agreement with Messrs. Macro Ocean Investment Consortium at a total cost of US$649,976,167.00 for the execution of the project on design, finance, build, maintain, operate and transfer basis on February 28, 2023 in Ndola,” he said.
Mr Mulowa explained that the scope of the project during the concession period includes the performance and execution by the concessionaire of all design, engineering, financing, procurement, construction, completion, operation and maintenance of the project infrastructure. This includes construction of a 327 km of dual carriageway from Lusaka to Ndola and the construction of Kabwe and Kapiri Mposhi bypasses; There is also the rehabilitation of 45 kilometres of the Masangano-Fisenge-Lunshya road as well as the construction of two new toll plazas and two weigh bridges.
The scope of work also involves the expansion and improvement of existing bridges. The concession period is 25 years. Three years involves the construction phase and 22 years operations and maintenance.
“Further, prior to the signing of the Concession Agreement, the Road Development Agency (RDA) as the Contracting Authority, issued the Request for Proposals (RFP) and related documents to the shortlisted bidders in accordance with Articles 27 and 28 of the amended PPP Act no. 14 of 2009.
In the RFP the Contracting Authority indicated that the project is to be financed through the Project Finance Model. Under this model, the Private Party will incorporate a Special Purpose Vehicle (SPV) for the sole purpose of executing the requirements of the project and that it was anticipated that substantial funding for the project will be provided by limited recourse debt. The debt shall be provided by lenders,” Mr Mulowa says
He says lenders were defined as financial Institutions, banks, multilateral lending agencies, trusts, funds and agents or trustees of debenture holders, including their successors and assignees, who have agreed to guarantee or provide finance to the concessionaire under any of the financing agreements for meeting all or any part of the total project cost.
“During the tender stage, bidders were required to provide only letters of commitment and term sheets from would be financiers. In view of the above context, the National Pension Scheme Authority (NAPSA) might be part of the lenders,” Mr Mulowa says He says at this stage, the financing agreements have not been finalised and signed.
Mr Mulowa says the combination of debt and equity financiers will only be cast in stone when the concessionaire reaches financial closure.
“It should be noted that the transportation sector is critical to the economic growth of any nation, as it facilitates commerce, and trade of goods and services. Currently, over 60 percent of Zambia’s road network is in a poor state and this has had a negative impact on various economic activities as transit time for cargo and people has increased, vehicle operation costs are high, and road safety is compromised,” he says
Mr Mulowa says to negate this narrative, under a tight fiscal space, the Government through the RDA has embraced and is promoting investment and participation by the private sector in the development and maintenance of the transportation and logistics infrastructure in pthe country.
“Several critical road links, therefore, have been identified and processes to have them constructed and rehabilitated under the PPP Model have commenced.
The procurement processes on these identified roads will also be done in a highly transparent manner and strictly within the confines of the provisions in the PPP Act No. 14 of 2009,” he saysestment and participation by the private sector in the development and maintenance of the transportation and logistics infrastructure in the country.