US$2,7bn road project unsustainable — report

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DESPITE this week’s launch of the framework for the start of the dualisation of the Harare-Beitbridge highway, a study by the government shows that Zimbabwe’s present economic conditions cannot support the project of that magnitude running into billions of dollars.

By Hazel Ndebele

Zimbabwe subsists on a paltry US$4 billion annual national budget. At least 96% of total revenues are gobbled up by the civil service wage bill and other recurrent expenditure, while only 4% remains for capital projects.

This comes as Transport and Infrastructure Development minister Joram Gumbo on Wednesday also announced that government will proceed to do business with corrupt Chinese contractors for the project who are expected to fly into the country before the end of the year.

Chinese firm, China Harbour Engineering Company Ltd (Chec), which was blacklisted by the World Bank for fraud and corruption, is one of the main contractors awarded the road construction job.

Gumbo signed a Concession Agreement and Engineering Procurement and Construction contract with Geiger International, which specialises in military equipment and not construction, to pave way for the start of the dualisation of the Harare-Beitbridge highway. The project is valued at US$984 million.

Questions sent to Gumbo last week, including those on the Beitbridge-Chirundu road project, were not responded to at the time of going to print.

Gumbo said 40% of the value of the Harare-Beitbridge road project, which is US$393,6 million, would be sub-contracted to local companies.

However, insiders say this raises eyebrows and concerns from taxpayers and stakeholders who fear the project is being inflated to accommodate the personal financial interests of government officials and their cronies.

Construction and dualisation project of the 897km Beitbridge-Harare-Chirundu stretch is expected to cost entire US$2,7 billion.

However, construction experts told this paper that considering the economic crisis the country finds itself in, rehabilitation of the road would have made economic sense than dualisation.

“The construction of the road is necessary, but at the moment it is not viable as the Transport masterplan clearly states that what could be feasible is to rehabilitate the road like they did with the 820km Plumtree-Mutare highway which cost US$206 million without dualising,” said the expert.

Even a government-commissioned report seen by the Zimbabwe Independent, titled The Transport Master Plan, which looked at a holistic picture of the transport sector, reveals that although the project is economically desirable, it is however uneconomic and unaffordable.

“Funding for roads should normally come from the national fiscus, but because of the economic difficulties experienced by Zimbabwe and with limited funding from multilateral financial institutions and bi-lateral foreign donors, funding for capital projects has been very limited in the past decade or more,” reads the masterplan.

“Public-private partnerships (PPPs) road sub-sector projects in Zimbabwe at the present time are inhibited by the low volume of traffic, even on the major highway like the Harare-Beitbridge Road, whose average traffic is around 1 000 vehicles per day, making the roads unviable on a self-financing basis, although they may be economically viable.

“Alternative investment strategies include the transfer of some of the commercial or demand risk to government, either through the availability of a payment mechanism, equity injection or other similar arrangements, which may not be feasible under the prevailing economic environment.”

Government contends that taxes from fuel, tolling fees and road administration fees will be used to raise funding but experts are skeptical.

Experts also told the Independent that dualisation of the road does not make economic sense when traffic is very low as compared to 15 years ago when the road used to be the corridor for regional trade with African countries since Zimbabwe was still a thriving gateway to the region.

Sources said given what the Zimbabwe National Roads Administration (Zinara) generates from toll fees, it would take up to 100 years to pay back the entire loan facility — expected to come from China — without taking into account the interest fees on the loan, maintenance and labour costs.

Zinara, sources added, is currently not realising much due to a high number of unregistered vehicles which they say stands at 270 000 cars.

Zinara generates US$19 million from toll fees a year on the Beitbridge-Chirundu highway which has six tollgates and in total collects US$50 million from other roads minus the Plumtree-Mutare road whose fees are ring-fenced to pay back the Development Bank of Southern Africa loan which financed the project.

2 thoughts on “US$2,7bn road project unsustainable — report”

  1. SaMapara says:

    we have engineers here in zimbabwe, why go look for chinese engineers….

    1. Muzivi Wenzira says:

      Those Zimbabwean engineers are the ones being sub-contracted to do 40% of the roadworks. Truth be told our government is broke and we needed some outsider arrangement to finance this project. I’d rather wait and see how the next 18 months unfold then we will see the sincerity of the entire project team/stakeholders

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