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Port Managers Association of East and Southern African
Conference28 November 2011
Swakopmund, Namibia
Thoughts on the financing of ports within Sub-Saharan Africa’s transportation networks
Peter Copley, Transport Specialist, Development Bank of Southern Africa….
With great honour and some trepidation….Subject matter more or less the following….
• How to attract investment in our ports?
• Partnership with Government
• Attracting international shipping companies to our ports
How to attract investment in our ports
• Society decides• Post 1994 South Africa saw great international
interest in internal investment• This came from then Deputy President Mbeki,
highlighting the role of the senior political patron
• Driven by permanent public servants• Supported by project driven private sector
champions
How to attract investment to our ports (2)
• Post Polokwane, when society elected President Zuma to succeed President Mbeki, the commercialisation/privatisation process appeared to stall
• Current international PPP interest in Africa is in Nigeria
• South Africa will have to see what happens in Manguang next May….with the next societal expression of direction
• To attract international investment you have to show the World that you are investment friendly
Not that it matters TOO much…..look to rail as an example
• Of the G7, USA, UK and Japan have private sector rail systems (Japan the late comer as the national economy could no longer carry the debt. It took 10 years to take that decision)
• Germany, Italy and France have state owned rail systems
• Canada has a private system AND a state owned system
• 50: 50 split, so there are no right answers• Society ultimately decides whether the public or
private sector is the predominant source of finance, or PPP’s
PRIVATE-SECTOR FUNDING - EMERGING MARKETS
Regional DistributionREGION No OF COST %
PROJECTS US$m
Latin America 38 5 980 48%Asia 20 4 947 40%Europe 7 1 007 8%Sub-Saharan Africa 3 102 <1%Central Asia, Middle Eastand North Africa 2 323 3%
12 360 100%
SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, again at the peak
Partnership with Government
• The Maputo Corridor started (1995) within South Africa’s company and contract law
• Only followed with PPP legislation in 1998• Maputo Corridor now essentially a private
sector driven corridor• Walvis Bay Corridor Group a true Public
Private Partnership• We can learn something from that
Real Gross Fixed Capital Formation by the South African General Government and Public Corporations on Economic and Social Infrastructure, 1946 -2007 (Rm)
28 Nov 2011 PMAESA, Swakopmund
Attracting international shipping companies to our ports
• Safety and efficiency in turn around times!• Vehicle carrying vessels are turned around in 4
hours at Maputo vs 24 hours in Durban• Which would you choose?• Facilitated by effective use of ICT, clearing
customs while the vessel is still at sea• We need to turn BRICs into BRICS• Reflect on China’s balance of payments and the
role of coal
World Oil Production Forecast
Source: Energy Watch Group (2007)
Current Seminal Documents for Africa
• ‘The African Infrastructure Country Diagnostic (Study)’:"Africa‘s Infrastructure: A Time for Transformation”: The World Bank, released in 2009 http://www.infrastructureafrica.org/aicd
• ‘Infrastructure to 2030’: (ISBN 978-92-64-02398-7 OECD Publishing, May 2006)
• Amongst many other publications and studies both local and regional, especially regional integration (e g SADC)
28 November 2011 PMAESA, Swakopmund, Namibia
The Africa Country Infrastructure Diagnostics Study backlogs
• A huge number, of which the backlogs are,• 50% energy• 25% transport• 15% Information and Communications
Technology (ICT)• 10% water and sanitation
PRIVATE SECTOR FUNDING-EMERGING MARKETS
Various Infrastructure Sub-sectors
SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, at the peak
SUB-SECTOR No OF COST %PROJECTS US$m
Power 28 5 706 46%Telecoms 21 4 861 39%Ports 9 222 2%Pipelines 6 1 092 9%Railroads 3 117 <1%Water 2 362 3%Roads 1 313 2%
12 360 100%
The fundamentals from a point of view of the OECD
• OECD Publication ‘Infrastructure to 2030’• Amongst 15 policy recommendations:
– ‘The governments of the World can no longer afford to provide necessary infrastructure unaided. There HAVE to be PPP’s’
– ‘Infrastructure is long term in nature and its provision is necessary irrespective of political persuasions’
– ‘Asset management is as important as new capital investment’
– (Recognise climate change, rising sea levels and extreme events)
Road Network Links: Current Quality and Potential Significance (West - Southern Africa Link Enlarged)
South Africa’s logistic competitors:(Source: PWC Germany ‘New spokes, new hubs’)
• China Logistics Performance Index 3.49 (#27)• South Africa Logistics Performance Index 3.46 (#28)
• Turkey Logistics Performance Index 3.22 (#39) • Brazil Logistics Performance Index 3.20 (#41)• India Logistics Performance Index 3.12 (#47)• Mexico Logistics Performance Index 3.05 (#50)• Russia Logistics Performance Index 2.61 (#94)• South Africa’s World Competitiveness Ranking (#54)
SADC Intra Regional Traffic movement (1996)……2011?
28 Nov 2011 PMAESA, Swakopmund
Thank you
Contact Details
Development Bank of Southern Africa
Registered office Postal Address Telephone1258 Lever Road
Headway Hill
Halfway House
South Africa
1685
PO Box 1234
Halfway House
Midrand
South Africa
1685
+27 11 313 3911
Fax +2711 206 3336
WEBSITE ADDRESS: www.dbsa.org
Peter Copley Transport Specialist peterc@dbsa.org
28 Nov 2011 PMAESA, Swakopmund, Namibia
Peter Copley, Transport Specialist, Development Bank of Southern Africa….
With great honour and some trepidation….Subject matter more or less the following….
• A broad background to funding of transportation of infrastructure in general• What lessons have we learned?• Putting these lessons into some focus for the future
Current Seminal Documents for Africa
• ‘The African Infrastructure Country Diagnostic (Study)’:"Africa‘s Infrastructure: A Time for Transformation”: The World Bank, released in 2009 http://www.infrastructureafrica.org/aicd
• ‘Infrastructure to 2030’: (ISBN 978-92-64-02398-7 OECD Publishing, May 2006)
• Amongst many other publications and studies both local and regional
28 November 2011 PMAESA, Swakopmund, Namibia
The World Bank’s ‘Africa’s Infrastructure backlogs’
• A huge Number, of which the backlogs are,• 50% energy• 25% transport• 15% Information and Communications
Technology (ICT)• 10% water and sanitation
Chasing Moving Targets
Coverage Backlog
water 10.0 1.8
11.1 1.4
sanit 9.8 2.0
11.2 1.3
elec 8.3 3.5
10.0 2.5
cell 3.8 8.0
9.1 3.4
278 Nov 2011 PMAESA, Swakopmund
28 Nov 2011
PMAESA< Swakopmund
Sector 1974 – 82 1983 – 92
Irrigation and Drainage 17 13
Telecommunications 20 19
Transport Airports Highways Ports Railways
18 17 20 19 16
21 13 29 20 12
Power 12 11
Urban Development Water & Sanitation Water supply Sewerage
Not available 7 8 12
23 9 6 8
Infrastructure Projects 18 16
All Bank Operations 17 15
Average Economic Rates of Return (% per annum) on World Bank supported projects: 1974 –92 (Quoted from ‘World Development Report 1994’, The World Bank, Washington DC)
The water related rates are financial, not economic, rates of return
The fundamentals from a point of view of the OECD
• OECD Publication ‘Infrastructure to 2030’• Amongst 15 policy recommendations:
– ‘The governments of the World can no longer afford to provide necessary infrastructure unaided. There HAVE to be PPP’s’
– ‘Infrastructure is long term in nature and its provision is necessary irrespective of political persuasions’
– ‘Asset management is as important as new capital investment’
‘The governments of the World can no longer afford to provide necessary infrastructure unaided. There HAVE to be
PPP’s’
• A questionable statement?– With emerging markets currently showing better
growth opportunities and return than mature markets, funding is flowing into the emerging economies BUT change is constant and cyclical.
– South Africa had a window of opportunity immediately post 1994 and SANRAL availed itself of that opportunity with the Maputo Toll Road, the N3 and the Bakwena Toll Road, together with two prisons.
– That opportunity changed with Polokwane and the deep pockets of the private sector investment community are currently looking in Africa to Nigeria.
13 rail concessions had been awarded by mid-2005 and there have been a further two since then.
SitarailIvory Coast/Burkina Faso
1995
TransrailSenegal/Mali
2003
Railway operated by state railway company
Privatisation projects planned or underway
Railway now under private management
CamrailCameroon
1999
TransgabonaisGabon1999
Part of rail network now under private management
RSZZambia 2003
CEARMalawi 1999
CDNMozambique
2005
BeiraMozambique
2004
BBRZimbabwe
1997
MadarailMadagascar
2003
SizarailDRC
1995 – 1997
Ressano GarciaMozambique
Not yet operational
TogoWACEM
2002
Kenya/Uganda and Tanzania have both been awarded and are scheduled to commence in 2006. Sizarail (DRC) was ‘cancelled’ following a change in government Ressano Garcia was cancelled in late2005 Transgabonais was cancelled in 2003 and is being temporarily operated by the losing bidder.
‘Infrastructure is long term in nature and its provision is necessary irrespective of political persuasions’
• The Maputo Toll Road is now in its 15th year of operation; the N3 in its 13th; and Bakwena in its 11th. No social unrest. No community violence…..provided there are alternatives (eg Malelane and Parys with no alternatives).
• South Africa HAS two PPP prisons which were built in 2000 and which are referred to in very good terms by the Inspector of Prisons, Judge van Zyl. Despite this the Minister has scrapped the next round? Why? The market gets confused by conflicting signals and people stop buying.
• Second round of PPP interest in South Africa appears to be coming from the success of Maseru Hospital.
• Long may it last in the legal and procurement framework which has now been established by the PPP Unit of the National Treasury
‘Asset management is as important as new capital investment’
• On a recent 3 000 km road trip from Gauteng to Lusaka the ONLY road maintenance I saw being performed was on the PPP Bakwena Toll Road (Polokwane to Tshwane) and by a trader outside of his shop near Livingstone.
• Reality is that providing, operating and maintaining infrastructure IS expensive…..and necessarily needs to be on-going.
• A fundamental rule is that you will spend the same again in maintaining infrastructure over the life of the asset, if it is to be kept functional.
• In broad terms this means that road provision costs are about 2 to 3 times what we would like them to be….and the same with rail….and the same with electricity…..and I presume the same with water and sanitation.
• With communications we just pay! We are prepared to pay R2,60 per minute to talk on a cell phone but we aren’t prepared to pay R0,53 per minute to use an urban toll road? (The utility of time?!)
Road Network Links: Current Quality and Potential Significance (West - Southern Africa Link Enlarged)
The World Bank’s ‘Africa’s Infrastructure backlogs’
• A huge number, of which the backlogs are,• 50% energy• 25% transport• 15% Information and Communications
Technology (ICT)• 10% water and sanitation
What is the single fundamental issue?
• I submit that the single issue is whether these backlogs should be addressed by public or private funds, or a combination of both through Public Private Partnerships, commonly known as PPP’s
PRIVATE SECTOR FUNDING-EMERGING MARKETS
Various Infrastructure Sub-sectors
SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, at the peak
SUB-SECTOR No OF COST %PROJECTS US$m
Power 28 5 706 46%Telecoms 21 4 861 39%Ports 9 222 2%Pipelines 6 1 092 9%Railroads 3 117 <1%Water 2 362 3%Roads 1 313 2%
12 360 100%
PRIVATE-SECTOR FUNDING - EMERGING MARKETS
Regional DistributionREGION No OF COST %
PROJECTS US$m
Latin America 38 5 980 48%Asia 20 4 947 40%Europe 7 1 007 8%Sub-Saharan Africa 3 102 <1%Central Asia, Middle Eastand North Africa 2 323 3%
12 360 100%
SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, again at the peak
Real Gross Fixed Capital Formation by the South African General Government and Public Corporations on Economic and Social Infrastructure, 1946 -2007 (Rm)
11 Nov 2011 PMAESA, Swakopmund
Understanding the types of PPPs applicable totransportation projects
• BOT’s; BOOT’s; EPC’s; EPCM’s are possibly there to confuse us
• Fundamental is that there can be a procured PPP, from a body of government, or an unsolicited PPP proposal, which has to be handled in terms of the law
• SANRAL an example of a body with a policy on unsolicited bids
• Fundamental to match the technicalities of the proposal with the finances available
• You CAN’T and don’t want to print money
The spectrum of PPPs
Outsourcing municipal vehicle fleets and services such as
garbage collection, tendered bus services
Public control
Private control
Water and Wastewater
Facilities
Lease of municipal land
South African Toll Roads, Gautrain
Development of cellular phone
network
Build-Finance-Operate-Transfer
Operations & Maintenance
Lease-Develop-Operate
Turnkey Operation
Design-Build-Finance-Operate
Often broadly defined as concessionsDegree of private sector control of assets
Experience from South Africa’s Toll Roads
• Entered into before PPP Legislation was in place
• 30 year wholly private sector concessions which have changed hands now twice in about 12 years
• 20 investors each at about ZAR 100 m each
Strategic road network of South Africa (SANRAL:
2005)
Who are the investors?• Contractors are the equity investors• Thereafter FNB, Standard, Nedbank, ABSA as 8
year lenders• Thereafter RMB, Standard Merchant, Investec as
12 year lenders• Thereafter Old Mutual, Sanlam, Mine Officers’
Pension Fund, Mine Employees’ Provident Fund, SASOL Pension Fund as 15 year lenders
• and Public Debt Commission, DBSA/EIB as 20 year Lenders.
How is this being modified as we go forwards?
• Gautrain’s Special Purpose Group (10% of equity)
• Reya Vaya’s 526 taxi drivers and operators• Government Employee’s Pension Fund owns
60% of JSE, which is in the World’s Top 20• Transnet currently looking for ZAR100 to 300
bn (Euros 10 to 30 bn)• Will they get it?
Vertical PPP’s?• This does open a door to ‘vertical PPP’s’ recognising
that PPP’s are NOT fixed instruments. They are living businesses which run for the duration of the asset and quite possibly for longer. They are tradeable commodities.
• Equity investors; commercial banks; merchant banks; pension funds; DFI’s; Governments all have horizons. Recognise them and use them.
• We don’t have to look at the entire life of the asset to make a single successful PPP.– (Interesting to reflect on Anglo PLC and the Chilean State
miner at present)
13 rail concessions had been awarded by mid-2005 and there have been a further two since then.
SitarailIvory Coast/Burkina Faso
1995
TransrailSenegal/Mali
2003
Railway operated by state railway company
Privatisation projects planned or underway
Railway now under private management
CamrailCameroon
1999
TransgabonaisGabon1999
Part of rail network now under private management
RSZZambia 2003
CEARMalawi 1999
CDNMozambique
2005
BeiraMozambique
2004
BBRZimbabwe
1997
MadarailMadagascar
2003
SizarailDRC
1995 – 1997
Ressano GarciaMozambique
Not yet operational
TogoWACEM
2002
Kenya/Uganda and Tanzania have both been awarded and are scheduled to commence in 2006. Sizarail (DRC) was ‘cancelled’ following a change in government Ressano Garcia was cancelled in late2005 Transgabonais was cancelled in 2003 and is being temporarily operated by the losing bidder.
Putting the partnerships in PPP: How to ensure best practice in PPP projects• The World remains of differing opinions• G7 rail systems equally split between private
and public ownership• Recognise that reality and recognise
fundamental need against fundamental constraints of affordability
• Recognise the term of ‘Public Private Partnerships’ and be true to that term
SADC Intra Regional Traffic movement
11 Nov 2011 PMAESA, Swakopmund
Road Network Links: Current Quality and Potential Significance (West - Southern Africa Link Enlarged)
The rail networks of sub-Saharan Africa are capable of carrying 23 million tonnes per annum. They currently carry 3,5 million tonnes.
Applying lessons from successful BOT /PPP processes
• Three way institutional linkage• Top level political patronage• Ongoing public sector leadership• Clear set of rules• Ongoing private sector leadership• Reality in costing and in revenue streams• Consistency in application of the rules,
including taxation
Where to from here?
• Basic thresholds of sustainable PPP’s, from 4 000 vpd for road; 300 000 tonnes per annum for rail; 3 m tonnes per annum for ports; 250 000 passengers per annum for airports, with proven growth
• Think in terms of BRICs and the reality of southern Africa
• A fundamental need to think regionally.
The Ports of Sub-Saharan Africa
• Djibouti, Mombasa, Dar es Salaam (incl Tanga, the lakes and Mtwara)
• Pemba, Quelimane, Nacala, Beira, Maputo• Richards Bay, Durban, East London, Nqura,
Port Elizabeth, Mossel Bay, Cape Town, Saldahana
• Luderitz, Walvis Bay• Namibe, Lobito, Luanda, Benguela, Pont Noire
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Kisangani
Brazzaville
KanangaDar es Salaam
Menongue
Gaborone
PretoriaMaputo
Johannesburg
Durban
Port Elizabeth
Kinshasa
Bujumbura
Kigali
Maseru
Matadi
Huambo
Kimberley
East London
KahembaDodoma
Mtwara
Toamasina
Bloemfontein
Bulawayo
Livingstone
Mbandaka
Nacala
Kigoma
Mbabane
Pointe Noire
Port Gentil
Toliara
Antananarivo
Beira
Cape Town
Harare
Libreville
Lilongwe
Malanje
Lumumbashi
Lusaka
Mombasa
Nairobi
Walvis Bay
Windhoek
Democratic Republic of Congo
Tanzania
Rwanda
Burundi
Angola
Zambia
Malawi
Mozambique
Zimbabwe
Namibia
Botswana
South Africa
Swaziland
Lesotho
Congo
GabonKenya
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Benguela
Namibe
Luanda
Madagascar
DEVELOPMENT CORRIDORS AND SDIs IN THE SADC REGIONShowing the Current and Potential Regional Corridor Traffic FlowsCurrent / Medium Term Potential in million tonnes per annum, year 2000
LOBITO Dev. Corridor0 / 1.0 mtpa
Coast-to-Coast Corridor0.2 / 1.0 mtpa
TAZARA Dev. Corr.0.5 / 1.5 mtpa
Walvis Bay Dev. Corridor2.0 / 3.0 mtpa
BEIRA Dev. Corridor2.0 / 5.0 mtpa
NACALA Dev. Corr.0.3 / 0.8 mtpa
MAPUTO Dev. Corridor3.0 / 6.0 mtpa
Lake Tanganyika Transport, Mpulungu
0.1 / 0.3 mtpa
Great Lakes Region Import Export Vols
1.6 / 2.4 mtpa
Alternative road route from Zambia
Zambia Import/Export plus Transit 1.6 / 4.0 mtpa
Zimbabwe Import Export plus Transit 4.0 / 8mtpa
Botswana Inports Exports Plus Transit 1.5 / 2.0 mtpa
Agriculture
Manganese
Forrestry Copper
Copper
CoalCoal Steel
Chrome
Agriculture
Coal
Manufactured Goods
Options practiced in SADC Vehicle
sRoad Rolling
Stock and Locomotives
Rail Port facilities
Port equipment
Ports Pipelines
Aircraft Airports
Energy Water
Leasing
Franchising
Concessioning
Contracting out
Bond financing
Equity investments
Venture capital
Mombasa
Dar es Salaam
Nacala
Beira
Maputo
LEGEND
0 500 1000km
DBSA : N-S CORRIDOR TO GREAT LAKES REGION: DEFINITION OF NORTH-SOUTH CORRIDOR
Main Rail Routes - operational
Main Rail Routes - non operational
Main Road Routes
Main River / Lake Routes
Main Centres & Ports
Walvis Bay
Matadi
Pointe-Noire
Lobito
MalangeLuanda
Huambo
NamibeMenongwe
Saldanha
Cape Town Port ElizabethEast London
DurbanRichards Bay
Maputo
Beira
Johannesburg
Kisangani
Ilebo
Kindu
Kampala
Kigoma
BujumburaMwanza
Kisumu
Kigali
DodomaKalemie
Kamina
Kolwezi
Lubumbashi
Tenke
Ndola
Lusaka
Chipata
Kafue
HarareVictoria Falls
Bulawayo
Beitbridge
Pretoria
Nairobi
Mombasa
Dar es Salaam
Kidatu
NacalaBlantyre
Kinshasa
Kikwit
Africonsult / Giersing Rose Mar 2001
Lake transport operated by AMI/TARC, functioning well
Lake tranport by ferry on Lake Tanganyika – ports to be upgraded
Kidatu trans-shipment facility. Changeover from 1067mm gauge to 1000mm gauge (TARC)
Possible new 130km rail link from Kasama to Mpulungu
Tazara Railway system 1067mm
Sena railway line, closed at present. Only regional railway connection to Malawi and Nacala Corridor
Beira Port: the shortest distance by road / rail from Ndola / Lubumbashi by approximately 600km
New Beitbridge to Bulawayo railway (BBR)
Alternative railway routes from Gauteng to Bulawayo: Botswana and BBR routes
Lobito Corridor - Benguela Line, closed at present. Distance to Copper Belt longer than routes to Dar es Salaam and Beira
Road connection between Kafue and Lions Den. Shorter than rail route through Bulawayo by more than 800km
Alternative road route from Botswana to Zambia – new railway under consideration
Gobabis
Luderitz
Mbeya
Lions Den
Lilongwe
Tete
Kariba
Lake Malawi
Lake Tanganyika
Lake Victoria
Windhoek
Gaborone
Trans-Kgalagadi / Walvis Bay Transport & Development Corridor
Maputo Development Corridor
Beira Development Corridor
Sena
Trans-Caprivi Corridor Final surfaced road section now completed
Kasama
Mpulungu
Position of North-South Corridor
Gauteng
New Bridges over Zambezi
Kapiri Mposhi
A closing word on China
• From Dr Lucy Kaukin’s doctoral thesis on trade between Angola and China
• Africa accounts for 4% of China’s trade• Trade balance heavily in favour of Angola• And in fact SADC trade balance with China is
still in SADC’s favour• Hence China is working to bring about balance
but it is not the only solution as most Chinese money stays in China
World Oil Production Forecast
Source: Energy Watch Group (2007)
Transport Energy Efficiency
57
Source: http://openlearn.open.ac.uk/file.php/1697/t206b1c01f49.jpg
Comparative modal energy efficiencies
• Rail is 3 to 5 times more fuel efficient than road
• Water is 100 times more fuel efficient than rail• Where is our coastal shipping?
Thank you!
Contact Details
Development Bank of Southern Africa
Registered office Postal Address Telephone1258 Lever Road
Headway Hill
Halfway House
South Africa
1685
PO Box 1234
Halfway House
Midrand
South Africa
1685
+27 11 313 3911
Fax +2711 206 3336
WEBSITE ADDRESS: www.dbsa.org
Peter Copley Transport Specialist peterc@dbsa.org
7 Dec 2009 ESASTAP/CSIR/COST/Dept Science and Technology Conversation, CSIR
South Africa’s logistic competitors
• China Logistics Performance Index 3.49 (#27)• South Africa Logistics Performance Index 3.46 (#28)
• Turkey Logistics Performance Index 3.22 (#39) • Brazil Logistics Performance Index 3.20 (#41)• India Logistics Performance Index 3.12 (#47)• Mexico Logistics Performance Index 3.05 (#50)• Russia Logistics Performance Index 2.61 (#94)• South Africa’s World Competitiveness Ranking (#54)
Port of Maputo – Traffic Handled (‘000tons)0
2 000
4 000
6 000
8 000
Traffic (Total) Traffic (conc) Traffic (CFM)
Traffic (Total) 4 001 4 424 5 036 5 540 6 366 6 672
Traffic (conc) 2 586 2 013 2 851 3 127 3 875 4 024
Traffic (CFM) 1 415 2 411 2 185 2 414 2 491 2 648
2001 2002 2003 2004 2005 2006
0.00
2 000.00
4 000.00
6 000.00
8 000.00
10 000.00
12 000.00
10^3
Ton
. Mét
ricas
2001 4 001.50 2 356.10 743.30 132.90 78.00 7 311.90
2002 4 423.60 2 761.90 779.70 164.20 71.30 8 200.70
2003 5 035.90 2 322.60 807.90 177.40 66.70 8 410.50
2004 5 540.30 2 273.60 908.90 217.40 78.30 9 018.50
2005 6 366.90 2 419.00 875.50 243.40 77.60 9 982.40
2006 6672.2 2652.5 950.1 218.5 105 10 598.20
Maputo Beira Nacala Quelimane Pemba Total
CFM PORT TRAFFIC
Recent History of Maputo Port• Pre 1975 handled approx 14 million tonnes per annum• Post 1975 dropped to 3 million tonnes per annum (Limpopo and Goba Rail lines)• Post Nkomati Accord increased to 8 million tonnes per annum• One year later dropped back to 3 million tonnes due to inadequate security• British aid accordingly financed a fence!• 80% of Mozambican foreign exchange came from freight passing through the three
corridors• Circa 1980 World Bank appointed Parisbas to advise Mozambique Government on
how to privatise its ports• Circa 1990 RFP’s were invited (at US$20 000 each) and twelve parties took
documentation• Five responded, including Mersey, Lisconti and Skanska
Maputo Port 2006
Evaluation and Negotiation• Quite quickly MPDC were accorded preferred bidder status….• And negotiations continued for 10 years!• Fundamental was the need by MPDC to acquire both port authority and port
operator status with effective inland service (road AND rail)• Equally fundamental was the need for Mozambique to negotiate long and hard
(precedent for both Beira and Nacala)• In the interim MPDC operated as management agents for CFM• Slowly moving back to 6/80 million tonnes with a target of 15 million tonnes in
2010• As Skanska was an equity partner SIDA (Sweden) requested the DBSA to act as lead
arranger for the DFI’s• This augments the commercial arrangers who were in this case SCMB• Arrived at a 15 year concession in a ratio of approximately 50:50 equity to debt
Overview of Financial Package• Equity investors want 17% pa on investment over 5 years• Commercial Banks want about 15% over 8 years• Merchant Banks about 12% over 12 years• Pension Funds about 10% over 15 years• DFI’s (Development Finance Institutions) take a 20 year view
Role of the DFI’s in Financing Business
• Direct investment in projects through term loans• Credit enhancement through innovative structures, risk assumption and guarantees • Ability to mobilise additional funding from third parties• Strengthen the capacity of the borrower to implement and manage the project by
providing technical assistance• Policy and knowledge sharing and advice• Facilitation of public-private-partnerships• Support for black economic empowerment by funding sustainable BEE initiatives
and partnerships with indigenous business operators• Development of local capital markets in order to provide access to local currency to
offset exchange rate risk, access to long-term capital and increase investment alternatives
• Thus far not necessary to draw down on DBSA debt due both to slower development than anticipated and as supplier credit and equity have been sufficient to meet what has been necessary
Order of re-development• 1996 Maputo Toll Road
• 1998 Mozal and reintroduction of motor cars
• 2000 Return of the commercial banks
• 2002 Return of advertising
• 2004 Return of builders and painters
• 2005 Final signing of Maputo Port 15 year concession
Rail and port network of South Africa (Adapted from Barnard, D
2003 & National Ports Authority, 2004)
Saldanha Bay
Cape Town
Mossel Bay
Port Elizabeth
Ngqura: (under construction)
Durban
East London
Richards BayKWAZULU NATAL
MPUMALANGA
SWAZILAND
FREE STATE
NORTHERN CAPE
WESTERN CAPE
EASTERN CAPE
LESOTHO
GAUTENGNORTH WEST
LIMPOPO
Rail Network Classification
CoreExportNon coreOther
South Africa: Ports and Rail Network
Port classification
Deep water
Hub
Multi purpose
Port classification
1995 Port Infrastructure 2005
Maputo 1995
Maputo 2005
Ongoing support and possible future
• Maputo is primarily a niche port (cf Durban at 56 million tonnes, Richards Bay at 120 million, Saldanha at 26 million and Cape Town at 18 million tonnes)
• Dredged depth currently constrained to 9 metres (cf international need for 12 m or 16 m)
• Need for continuous dredging, still done by CFM• Quantum leap necessary if throughput were to go higher than 15 million tonnes
per annum• Absolute need for rail improvement and for one stop border• Also an example for other African ports (eg Mombassa, Dar es Salaam, Luanda,
Egypt, West Africa AND South Africa)
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