SA port congestion jolts Botswana to $6.5bn railway deal

Lewanika Timothy - Mbongeni Mguni | Monday July 22, 2024 06:00

President Mokgweetsi Masisi and his counterparts from Zimbabwe and Mozambique last week signed an agreement to develop the long-awaited Ponto Techobanine port and railway project. The project, initially conceived at least 15 years ago with early cost estimates of more than $6 billion, involves upgrading existing rail lines, building new connections, and developing a deepwater port at Techobanine, south of Mozambique’s capital, Maputo. The port will also serve as a possible export route for South Africa and Eswatini.

Transport and Public Works minister, Eric Molale, told state television last week in Mozambique that the project was necessary for alternative port access for Botswana and other countries in the region.

“When you look at South Africa, the ports are congested. There are many ships there and they wait for up to two weeks and that increases the demurrage costs. “We are looking at Techobanine in that context to say all the ports in Southern Africa, what can we do so that there are no delays in loading and offloading, not just for Botswana but even the rest of Africa,” he said.

Molale said the project’s progress over the years had been delayed by the fluctuating prices and fortunes of its anchor commodity, coal. With coal largely blacklisted by global financiers, he said the line’s feasibility would be anchored on various bulk commodities, including oil from the ports to inland markets such as Francistown.

The minister told state media that ultimately, the private sector and its needs would determine rates of return that would allow for the financing of the rail and port project.

“These types of projects are not paid for by governments and we are looking at private sector funding and concessioning of such for a certain period. “The Bulawayo-Beitbridge railway was done on the same basis and it should have paid it back in 25 years but it was 15 years. “There are others like Zambia to Angola, the Benguela railway, also a concession. Also, Tazara was a concession from Dar es Salaam to Zambia. “All these things, the businesses are looking at whether there will be returns,” he said.

Molale also revealed that Finance ministers from the three countries will be meeting soon to kick start a prefeasibility study, which can be wrapped up in three months.

“Once the prefeasibility says the project can proceed, we will move to the feasibility study which will not take more than 12 months,” Molale said.

The African Development Bank agreed to finance a feasibility study for the project at $4 million.

South African ports, the main entry and exit hubs for Botswana goods, have been overwhelmed with challenges in the past few years, causing delays in operations and financial losses.

In 2022, the Container Port Performance Index by the World Bank ranked the port of Durban 341 out of 348 ports in the world while the Port of Cape Town was ranked 344.

A report by Transnet, SA's state-owned logistics company, highlighted the gravity of these challenges reporting that in November 2023 alone, more than 60,000 containers were reportedly stuck at sea around the port of Durban due to bad weather conditions and equipment failures. Transnet’s troubles are generally around ageing equipment, while the government has been accused of underinvestment in strategic infrastructure and failing to conduct critical maintenance.

The Ponto Techobanine Project is one of a handful of railway lines government has prioritised for bulk exports in the short to medium term. The others include the Trans-Kalahari through Namibia, the Mmamabula-Lephalale through South Africa to Durban and the Mosetse-Kazungula through Zambia.

Molale previously told BusinessWeek that Botswana was positioning itself as a regional logistics corridor for both east-west as well as north-south trade traffic. Investments such as the Kazungula Bridge and the planned railways are part of the longer-term logistics strategy.

“We see ourselves as best-placed if we could open our corridors, especially for companies in the Witwatersrand region like Johannesburg and the Pretoria area of Gauteng,” he said. “This is because for them, either way, going west or east, they cover the same distance. “Some of them have even come to us, especially car manufacturers who export to Europe and other destinations as well as those with other products that are destined for markets, especially in the Middle East for fear of using the congested Suez Canal. “They prefer using Namibia, then going to the Mediterranean to the Middle East and so forth.”