Rail Link project remains a pipedream… as Eswatini Railway and Transnet still looking for funding

By Phephile Motau

 Ten years after its initiation, Eswatini Railways and Transnet are yet to solicit bids for the funding and development (construction) of the Eswatini Rail Link Project. The Request for Proposal [RFP] for the provision of the services was issued on August 29. The Eswatini and South African Governments initiated a project of mutual interest in 2012, that would deliver significant  socio-economic benefits to Eswatini, South Africa, and the SADC region. The lack of action on the project a decade later has raised some questions in many corridors, including in Parliament where members of parliament recently requested the Minister of Public Works and Transport to initiate a meeting between the Board of Directors of Eswatini Railways and members of the portfolio committee.

The initiative was cemented by the signing of a Memorandum of Understanding between the governments of Eswatini and South Africa on August 2, 2012. On November 22, 2014, an Inter-rail 

A Memorandum of Understanding was signed to cement the relationship at business and technical levels between Eswatini Railways and TFR, followed by an Inter-rail Memorandum of Agreement in 2015 for the project feasibility study. 

The approved study recommended that a proposed Davel – Lothair – Sidvokodvo (or alternative junction) link presented the best alternative route from the coalfields to the east coast deep water port of Richards Bay. 

The RFP states that a service provider is required to explore various options available to ensure the bankability of the programme, provide funding and execute the project.

According to the document issued on August 29, the service provider they are seeking must address some financial and commercial requirements including identifying the most optimal funding structure and preparing a funding model.

The main deliverables of this assignment were summarised as updating the business case of the ESRL programme, updating the financial model, project structuring, financial analysis, and risk analysis.

They also include funding options to ensure bankability, advising and securing funding for the programme, completing the Geotechnical Investigations and Engineering Designs, executing, and constructing the ESRL project, compiling and assisting the project team in preparing for and presenting to the various governance committees within Eswatini Railways and TFR.

The service provider must also be able to assist with the capital raising process based on a 100 per cent off-balance sheet funded solution; provide tax and accounting opinions on the proposed structure and prepare a risk register and mitigation strategies.

They must also aggregate the most optimal funding sources inclusive of risk packages to negate political and commercial 

Risk, Prepare the Programme Information Memorandum (PIM) for market sounding purposes and assist the ESRL Project in updating the business case and any other such documents as required to satisfy all internal approvals. 

Under the legal, regulatory, and compliance requirements, the consultant must be able to assist the ESRL Project in identifying and defining the most optimal funding structure, such as PPP, PSP, etc.; assist the ESRL Project with all legal agreements pertaining to the agreed funding structure and ensure that the ESRL Project is compliant with laws. They must also assist the ESRL Project with the preparation of documents for ministerial approvals. 

The service provider will be expected to carry out certain tasks in updating the financial model: which include the justifiable investment tenor (ensure equitable investment return for the parties in the SPV).

They must also perform validation of the existing situation with respect to freight volumes; distances; product mix; customers and contracts; macroeconomic drivers/variables and identification of potential opportunities.

The consultant must also be able to explore the modelling on the viability of the PSP Project, considering both the existing flow and potential flow; accurately capture operational costs; all project development costs including professional fees are to be included in the cost bucket; sensitivity analysis on freight volumes and the impact thereof should be clearly addressed. 

Furthermore, the Service Provider will be expected to address the project development requirements which include undertaking the investigation, design, procurement, equipment installation, civil works, testing and commissioning for the execution of the works in accordance with the stipulations of contract documents. 

It is required that the consultant performs a detailed geotechnical engineering study for the Lothair –Sidvokodvo railway line. The study shall be done in detail which means that the study shall inform structural and geometric design work activities. 

It is also required that the consultant performs a detailed geotechnical engineering study of the potential borrow pits for the Lothair – Sidvokodvo railway line in support of the environmental impact assessment process. 

The consultant is also required to perform detailed design of bridges to 100 per cent as per Transnet Project Life Cycle Process (PLP) guideline. The designs include 28 Bridges, 31 Underpasses, and 25 Cattle creeps.

In completion of the abovementioned requirements, the consultant should also produce Bridge Design Drawings for Construction along with a Bill of Quantities (BoQ) for all the above. 

It is required that the Consultant performs hydrological and hydraulic analysis for all proposed culverts between Lothair and Sidvokodvo. This shall be done to determine the final culvert sizes along with producing culvert design drawings.

The consultant shall also perform detailed per way and civil design, and this should be accompanied by design drawings for construction purposes. 

The development of the Eswatini Rail Link is expected to unlock a general freight railway corridor with a carrying capacity of approximately 36 million tonnes per annum. Eswatini Railways and TFR are seeking owners of freight, and related parties, who would be interested in utilizing this “new railway capacity”. Prospective 

bidders were also requested to highlight the commodities intended to be railed on this corridor, the anticipated annual 

volumes and five-year projections starting from 2026, including commodity origins and destinations.

Eswatini Railways and TFR anticipate the development of the new railway corridor to increase the need for freight wagons and locomotives to service customer needs. 

The document states that Eswatini Railways and TFR have spent a substantial amount of capital to develop the ESRL programme to its status. 

“Due to funding constraints, it is therefore desirable for the initial outstanding activities pre-project implementation (construction) as contained in this RFP document to be completed at risk,” the RFP states.

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