Ministry of Transportation and Infrastructure

Ministry of Transportation and Infrastructure

2013/14 2015/16 PROJECT MANAGEMENT PLAN

Ministry of Transport and Infrastructure Development Rail Division High Speed Intercity Passenger and Goods Rail Program

May 10, 2013

1.0 INTRODUCTION The Ministry is currently facing challenges in the provision of efficient transportation for citizens in a time of increased importations of Japanese commuter vehicles by the private sector which has caused unbearably congested roads and slow moving traffic within the city centres, against increasing demand for transportation alternatives to cushion against rising fuel costs and commuter fares. The implementation of enhanced passenger rail service in the country is a critical element in the countrys efforts to meet the transportation needs of the citizens (North Carolina High Speed Rail Project Management Plan). The government of Zimbabwe acknowledges that transport infrastructure is vital to the development of the countrys economy as it contributes through the movement of goods and people (Zimbabwe Medium Term Plan: 2011 -2015). The transport sector is the door way to local, regional and international markets for the nations business activities and consists of roads, rail and air; with roads being the mainly used for both private and commercial purposes. Bulky commercial goods are mainly transported by haulage

trucks both locally, for export and transit. Commuters are ferried by commuter omnibuses, luxury coaches and private motor vehicles. The dollarization of the

economy in early 2009led to a huge influx of second hand private motor vehicles from Japan and these have almost flooded the country and roads are overwhelmed. This has created a traffic jungle that needs taming and has made the creation of an alternative public transport system that takes away pressure from the road network imperative. The construction of an underground railway system is the most ideal project to achieve this objective. 1.1 Background (a) Roads: The countrys economy deteriorated tremendously in the period between 2000 and 2008 leading to government incapacity to maintain roads. The quality of roads depreciated as volumes of traffic continued to rise against non-expanding networks, and destruction was accelerated by overloaded heavy vehicles that ferry commercial consignments into industries. Today, the general state of roads is appalling and congestion is rife, as government struggles to expand, repair and maintain roads without adequate funding although the recently introduced toll gates are contributing in

revenue to a considerable extent. Although the road network requires total overhaul as the quality and capacity has rapidly declined (Zimbabwe Report), what is now apparent is that the capital city does not have space for continued expansion of roads. The creation of an efficient underground railway system will therefore attract the public thereby reducing pressure on the congested roads. (b) Rail: The rail network plays a vital function in economic development as major bulky raw materials and finished products are transported by rail. These include mineral ore, fuel, coal, and steel. Rail infrastructure has however deteriorated over the years due to vandalism, theft and lack of repairs and maintenance as well as non-replacement of assets resulting in low rolling stock (Zimbabwe Medium Term Plan: 2011-2015). This has had a negative impact and utilisation to full capacity has failed to be realised. Figure 1 below demonstrates: Asset Total Assets Locomotives Wagons Coaches 168 8,682 315 55 4,646 117 Number of Functional Assets Functional percentage 33% 54% 37% as a

(Source is NRZ as per Zimbabwe Medium Term Plan 2011-2015) According to Zimbabwe Medium Term Plan 2011-2015, National Railways of Zimbabwe (NRZ) was designed to move a tonnage of 18million annually, but between 2000 and 2009 there has been a sharp decline that has seen movement of an average of 5million tonnages owing to the challenges and constraints in NRZ. The incepti on of Government of National Unity (GNU) has seen an increase in industrial capacity utilisation from about 20 per cent to about 60 per cent and this resulted in more goods being moved from industry to customers. Currently Zimbabwe has many rail road crossings which have caused accidents which claimed lives and property. The current railway system is no longer capable of sustaining the demands of prevailing economic activities. network. This therefore points to the need to create a modern underground rail

PURPOSE OF THE PROJECT: This Report has given a brief outline of the challenges that are currently faced in Zimbabwe within the transport sector. Findings show that the deterioration in the quality of road and rail infrastructure and the subsequent increases in road traffic have led to congested roads in an increasingly busy environment.

This document is intended to provide the approach for ensuring the successful implementation of underground intercity high speed passenger and goods railway system in Zimbabwe to eliminate fleet road congestion. The project will be undertaken by the Zimbabwe Urban Commuter Railway Investment Company (ZURIC), a consortium that has proposed to undertake the railway project in conjunction with the Ministry of Transport. ZURIC has extensive experience in engineering, project management and construction, and all aspects of project implementation and its employees have complete capabilities and competencies. Project Team Committee This committee was formed by the Ministry of Transportation to conduct a transportation needs analysis and study the development of the rail plan as well as any encroachment issues and activities; prepare a budget and advise on funding. The rail needs identified by the committee include addressing highway congestion, increased passenger ridership and providing more intercity and urban transit choices, apart from the overwhelmed road transport (North Carolina High Speed Rail Project Management Plan). VISION: To be a regional hub for world-class transport and communications networks to our clients to deliver quality, affordable services to Zimbabweans and visitors. MISSION: To ensure the provision of adequate, efficient, affordable, safe and reliable transportation and communication systems through the formulation and implementation of appropriate policies, strategies and action plans.

a) Project Goals To make our transportation network move people and goods more efficiently and connect two geographical locations with the aim of reducing road

traffic congestion and reducing bottle necks in the current road based transport system. Goals: are statements that define the direction of the organisation over the long-run; and are established by top management. The Ministrys goals are:

Project Objectives These are more specific than goals and establish the specific targets which should be achieved by certain dates and serve as the basis for the development of programmes.

1. Reduce the transport costs by providing a cheaper means to transport goods between the two cities. 2. Reduce and possibly eliminate the schedule delays that are being caused by congestion on the road based transport system. Thus ensuring that we will be able to move both goods and people on time. 3. Contribute to the growth of the regional economies through the increase of employment opportunities and downstream demand of goods and services. These will come by primarily through the construction of the railway line and amenities and secondarily through the maintenance of the railway line and amenities. 4. The project has the potential to contribute to the promotion of competition because its implementation may facilitate the market entry of new operators in the transportation of goods and passengers. 5. Since a great part of the railway line will be sub terrain and will cross many rivers, this project will offer us a chance to showcase the countrys engineering expertise. E.g. the Gautrain railway line in South Africa is a marvel of South African engineering, thus fostering a sense of achievement in the public and communities.

6. Reduce the environmental impact of road motor transport. Railway lines by their very nature have minimal adverse impacts on the environment compared to the road transportation.

a) PROJECT ACTIVITIES

The project will entail the carrying out of the following activities 1. Surveying: the most economical path that the railway line will take will have to be surveyed and mapped out. Surveying or land surveying is the technique, or science of accurately determining the terrestrial or three-dimensional position of points and the distances and angles between them. These points are usually on the surface of the Earth, and they are often used to establish land maps

2. Geological surveying: since there is going to be tunneling Geological surveys will help stakeholders avoid any geological fault lines or expensive to tunnel through areas. A geological survey is the systematic investigation of the geology beneath a given piece of ground for the purpose of creating a geological map or model. Geological surveying employs techniques from the traditional walk-over survey, studying outcrops and landforms, to intrusive methods, such as hand augering and machine driven boreholes, to the use of geophysical techniques and remote sensing methods, such as aerial photography and satellite imagery

3. Chemical analysis of the soils so as to enable the cement manufacturers to come up with the best cement mixture that meets the conditions that the railway line will be passing through. 4. Appropriation of land through which the railway line will pass through and resettlement of any affected communities. 5. Identification and selection of the contractors. Identification and selection of key personal as well as employment of skilled, semi skilled and unskilled labour

6. Sourcing of finance and the coming up with the most appropriate finance model. 7. The tunnelling and construction of the railway line, bridges, overpasses. 8. Construction and upgrading of train stations through which the railway line will pass through. 9. Construction of service roads that will connect the train stations to existing roads and construction of service roads 10. Construction and upgrading of support infrastructure e.g. power lines and electricity substations, sidings , shunting yards 11. Project evaluation and closure. During the last phase the stakeholders will be informed and workers will be laid off. c) STAKEHOLDERS INVOLVED IN THE PROJECT. The stakeholders in the project will determine the success or otherwise of the project. Each will have to play its part. 1) Internal Stakeholders

Board of Directors - The ultimate decision making and fund allocation of the project lies with the transportation board. The board consists of 7 members appointed by the Parliament. Directors - are the executives who must ensure that they come up with the appropriate strategic plan for the project and ensure that all resources and funding are available. Their commitment is essential for the success of the project. Management - These are responsible for the implementation of the project in ensuring competent decision making in the allocation of resources and tasks. They are accountable for the achievement of set goals and objectives and their performance is measured on the achievements made. Employees - These are the operatives who are involved in the activities of the project. They must understand the purpose of the project and must be well motivated in order to achieve project goals.

2) External Stakeholders Government through: Ministry of Transport: - Project manager and selector of the Railway line, support infrastructure and amenities constructors Ministry of Finance : - Sourcing of finance and the concluding of any financing contracts Ministry of lands: - Appropriation of land for resettling any affected communities. Urban Authorities: - issuance of all relevant construction and operating permits. Community Leaders: - to encourage buy in from the communities through which the line will pass through, and in which the support infrastructure will be built Constructors: - any constructors involved in the construction of the railway line, support infrastructure and amenities are able to deliver on time Labour associations: - to engage and ensure that their constituency are abreast with the objectives of the project and that they will prevent any unnecessary work stoppages due to industrial action by the labour. Industry Players: - a vital buy in required, during and post construction it is the industry players that will determine the success or otherwise of the project and include: Energy Companies through the provision of energy (fuel and electricity) during and after construction of the railway line; Cement Manufacturers: - must be able to provide the correct cement mixture to the construction of the railway line, in the correct quantities and on time. Other industry players that will be moving their goods (raw materials, inter mediate and finished goods) through the railway line. Suppliers of other materials are essential in making these available. Pressure Groups: Environmental Management Agency: - to ensure that the project itself has a minimal negative impact on the environment. The agency will approve and oversee the implementation of the Environment impact

assessments Creditors, Banks and Financiers: They will want to know the credit worthiness of the project and whether it is a viable investment. Creditors will help in granting credit terms on sourcing material, banks will enhance major transaction processes and loans for kick-starting the project and financing as well. D) BUDGET FOR THE PROJECT

Total estimated expenses for this project are $85 million.

Project Task Surveying Geological surveying and

%allocation 1.5% 1.5%

Item Totals 1,275.000 1,275.000

Reason for Vote/Justification Surveying will enable the whole project to be cost effective by providing the most cost effective path across the two geographical points.

chemical analysis

Drawing Plans for 0.5% the railway line,

425.000

Architecture and structural designs for the buildings railway line,

tunnels and support infrastructure Land appropriation 6% 5,100.000

bridges and tunnels

This vote will be used to relocate and compensate any affected

and compensation

communities. The appropriation of land will not be a major stumbling block as all land in the country belongs to the state. Legal fees( permits 0.5% and licenses) 425.000 Environment impact assessment

plans, construction and operating plans, as well as permits that will be needed to ensure that the train stations and support infrastructures meets the litany of laws and by laws of the areas that it will pass through.

Materials Equipment Construction

and 10%

8,500.000

The materials covered by this vote are

and 70%

59,500.000

Involves

boring,

levelling,

fitting

out

of

the

construction of bridges, flyovers, train stations and other ancillary structures

tunnels and railway line Rolling stock, 10% 8,500.000

This provides the rolling stock( locomotives, goods wagons and passenger wagons) that will service the proposed railway line. As well as communications and control room infrastructure

communications and equipment signalling

TOTALS

$85,000.000

The budget of the project has been prepared using the following assumptions: 1. Any affected communities will accept the offered compensation or resettlement and that no disputes with regards to compensation will be brought to the fore 2. There will be no change of scope of the project due to community, archeological, environmental or geological pressures. 3. There will be political stability. This will enable the project to continue apace. Political stability is necessary to ensure that the project is completed within the set time frames. Also political instability may cause the country to be an unattractive destination for finance, the interest being paid on any finance sourced for the project might rise to reflect this instability thus stalling the project 4. There will be economical stability. Economic stability is necessary for the competition of the project on time and within the allocated budget. The adverse effects of economic instability on construction project of this magnitude can be seen on the various projects that have suffered still birth in Zimbabwe due to its economic instability from 1998 to 2008. Many projects mooted during this period were either abandoned or they stalled due to lack of funding

E.g. the construction of the Gwai-Shangani, Tokwe-Mkosi dams where all stalled due to the decline f the Zimbabwean economy. 5. They wont be any construction schedule delays due to labour unrests , payment disputes between the project owner and the constructors. Labour unrests almost torpedoed the schedules of the construction projects in South Africa during the run up to the 2010 world cup. 6. All the stakeholders will play their part effectively and deliver on the agreed key deliveries e.g. Ministry of Lands will acquire and resettle the affected communities at a pace that is in tandem with the construction pace. 7. There wont be any major technological changes that may negatively affect the construction or viability of the project. Any change in any technology that is going to be used in the construction of the railway line and supporting structures may have an adverse effect since it may entail retraining of labour or redesign of some aspects of the construction project both which may cause budget overruns 8. The selected contractors do indeed have the expertise to construct the railway line without resorting to unnecessary subcontracting.

d) Advise on the sourcing of funds

Given the current state of the Zimbabwean economy it is difficult for the Government to fund the project through resorting to either issuance of the Treasury Bills or budgetary support.

Treasury Bills- the failure of the last Treasury bills that were issued by the Government through the Reserve Bank of Zimbabwe makes this avenue of

sourcing funds very unattractive. The traditional buyers of TBs are not interested in TBs since most of them their liquidity positions are very precarious. The short term nature of the treasury bills versus the long term nature of the project might pose a very serious mismatch. Budgetary Support wit current revenue inflows of $2.9Bn against a recurrent expenditure of 80% of the revenue inflows, the Budget of Zimbabwe is not

structured in a way that is conducive to funding capital projects of this nature. By pursuing this funding option, the project will suffer the same fate as the GwaiShangani and Tokwe-Mkosi Dam projects that have stalled because their funding is exclusively through the national budget.

Budgetary allocations also suffer due to the competition of the said allocations with other projects e.g. elections

The only other options that are left are:

1. Donor support 2. Multilateral loans from Africa Development Bank, a multilateral development finance institution established to contribute to the economic development and social progress of African countries. Its mission is to is to fight poverty and improve living conditions on the continent through promoting the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region. 3. Build Operate and Transfer or Build-Operate and Own arrangements 4. A mixture of Budgetary funding, Donor funding and multilateral loans To completely fund the project through loans is also not advisable due the perceived risk that the country carries which will affect the levels of interest that are going to be levied on the loans. Standard and Moor have rated the countrys credit risk at B+ A Build Operate and Transfer or a Build Operate and Own arrangements The build-operate-transfer (BOT) or Build-Operate and Own ( BOO) approach for developing infrastructure projects is a technique that allows fast realization of public works in cases of a shortage of public funds. This process is full of risks, due mainly to the complexity and extend of the disciplines, public agencies and stakeholders involved

These risks are: Financial risks currency risks, equity risk, foreign exchange risk, commercial risk, liquidity risk, counter party risk and economic risk Political risks Technical risks Other risks sovereign risks and country risk construction risk and operation and Maintenance risk market risk, inadequacy of Concession contract, shareholders risk and risks associated with changes among key management personnel The final option is a mixture of budgetary funding, Donor Funding and multilateral loans. This option is ideal in that on pressure is overly exerted on the funds sources as each fund category can be allocated to cover those areas that the fund class is comfortable with. E.g. Donor funds can be used to fund compensation and resettlement whilst the loans and government funds can be allocated to the construction of the line and support structure. Some sections of the railway line and the related stations can be built under a Private- Public Partnership (i.e. BOT or BOO arrangements) e.g. the BeitbridgeBulawayo railway line that was built under a Built-Operate and Transfer arrangement. My advice is thus; funds should be sourced from the Africa Development bank due to the Africa centric nature of its operations. That part of the funds should be funded through the national budget as this will install in the public a sense of ownership of the project. Since railway lines by their very nature are a symbol of the nations progress

CONCLUSION The Ministry of Transport should embark on the project as it promises to bring in more benefits than costs in the long term future. The underground railway project is expected to enhance economic development through: increased tourism as it will be a master piece which is likely to attract attention from all nations; and also through the efficient movement of goods and services. It will extend transport networks to major cities like Victoria Falls, Bulawayo, Harare, Mutare and even extending to regional areas like South Africa, Zambia and Mozambique, thus growing alternative transit choices, reducing greenhouse gas emissions and road congestion by getting people out of their cars to a faster and more efficient mode of transport (2012/13-2014/15 Service Plan). It will also provide economic opportunities by creating 5,000 new jobs during construction. There will be improved movement of people and goods through the region due to the enhanced connection between two points across the country. The completed railway line will result in reduced travel times and reduced truck traffic especially for heavy truck traffic by providing a continuous highway from Victoria Falls border post to Forbes border post. RECOMMENDATIONS The Ministry of transport should actively win the cooperation of surrounding communities who will be displaced during the construction and offer compensation in advance so that no major delays will drag the project. With the ensuing elections in Zimbabwe, the ministry should strongly lobby for political will in the maintenance of the multi-currency regime so that any funds which would have been sourced are not negatively affected by a change in currency to Zimbabwean dollar. The project will bring in benefits in the long term future and the Ministry of Transport should give up the railway line to the private sector for proper up keep and self-funding so that an recurrences of dilapidated infrastructures will be avoided under the public sector.

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3. T. Merna and C. Njiru, Financing Infrastructure Projects. Thomas Telford, London, 2002 4. http://www.herald.co.zw/index.php?option=com_content&view=article&id=58033: work-on-airport-road-resumes&catid=46:crime-a-courts&Itemid=138 5. Crossrail, London, United Kingdom: http://www.railway-

technology.com/projects/crossrail/ 6. http://www.financialgazette.co.zw/top-stories/9607-govt-villagers-collide-overdam.html 7. http://www.morningmirror.africanherd.com/articles/Gwaai.htm 8. http://brainworkscapital.com/index.php/media-room/news/zimbabwe-news 9. http://www.tradingeconomics.com/zimbabwe/rating 10. http://www.afdb.org/en/countries/southern-africa/zimbabwe/ 11. Zimbabwe Medium Term Plan 2011-2015 12. 2012/13-2014/15 Service Plan viewed on 25.04.2013 at http://www.bcbudget.gov.bc.ca/2012/sp/pdf/ministry/tran.pdf