Zambia railways in K4 million losses

Zambia Railways Limited (ZRL) is facing a major crisis in its recapitalization and modernization project, which was aimed at rehabilitating and modernizing the country’s railway infrastructure.

The project was expected to improve the efficiency and safety of the railway network, reduce transit times and costs, and increase revenue for the company.

However, the project has been marred by safety concerns, financial mismanagement, and delayed deliveries, resulting in increased transit times, reduced freight volumes, and financial losses.

One of the major issues affecting the project is the poor state of the railway infrastructure, including the tracks, bridges, culverts, and drainages.

A review of the 2022 Safety Report by the auditor General’s office, revealed that the number of safety occurrences reported during the period under review increased to 696 from 642 occurrences in 2021, with 537 attributed to track failure. As a result, sections of the rail were placed on a temporal speed limit of 15 km/hr from an average speed of 50 km/hr, resulting in increased transit time for passengers and cargo. This resulted in increased transit time for passengers and cargo from an estimated 36 hours to an estimated 72 hours for a distance from Victoria Falls in Livingstone to Chililabombwe.

As a result of the increased transit time for passengers and cargo, ZRL failed to haul the planned 2,147,681 tonnes of freight for which revenue amounting to K780,861,229 was expected to be generated. Instead, ZRL hauled 1,612,486 tonnes which generated revenue of K389,506,100 resulting in a negative variance of 535,195 tons worth K391,355,129.

Another issue affecting ZRL is the failed delivery of fifty (50) wagons from Transnet – Freight rail -TFR, which was meant to compensate for the fifty (50) wagons that were either lost or damaged beyond repair on TFR lines in South Africa. However, as of 30th September 2023, the wagons had not been received, causing further delays and disruptions to ZRL’s operations.

According to the Auditor General report on the accounts of parastatal bodies and other statutory institutions for the financial year ended 31st December 2022, the recapitalization and modernization project has also been plagued by financial mismanagement. ZRL entered into a contract with Team Sweden Railways (TSR), a consortium comprising Yapiray and Yapi Merkezi companies established and existing in Turkey, for the rehabilitation and modernization of Zambia Railways Limited (ZRL) at a contract sum of €978,093,639 VAT exclusive. However, the company failed to secure financing for Phase 1 before the contract award, casting doubts on its ability to service the remaining 75% of the contract sum of €12,179,723 within the contract period of 6 months from the commencement date.

The delayed settlement of certified interim payment certificates resulted in the suspension of works by the contractor, with project completion being at 84% as of 31st August 2023.

The delay in completing Phase 1 has failed to execute Phase 2, which includes the rehabilitation of 1,029 km of the railway line from Livingstone to Sakania Border (including Chingola, Chililabombwe, and Mufulira branch lines) and the procurement of 500 locomotives and 1500 wagons.

Zambia Railways Limited (ZRL) is facing a

BETUZ backtracks on promise to construct $9b teachers’ houses?

In the turn of events, the Basic Education Teachers Union of Zambia – BETUZ, has revealed that the actual number of houses it plans to build for its teachers is 60,000, and not the previously stated 100,000, leaving out a significant 40, 000 with no clear explanation.

In 2022, BETUZ President Binston Tembo, and the union Secretary General, Henry Sinkala publicly announced that the union intends to invest about $9 billion to build 100,000 low-cost houses for its members across the country but has now u-turned the position suggesting that only 60, 000 houses will be constructed by the union.

The commencement of the construction of the now 60, 000 low-cost houses has also dragged after some sources indicated that the Union does not have the capacity to undertake such a massive project.

Earlier a financial expert exclusively with the Zambian Business Times – ZBT, questioned the $9 billion deal that the Basic Education Union of Zambia BETUZ signed with a United Arab Emirates-based Company to build 100, 000 houses on a rent-to-own initiative for teachers.

Speaking in an exclusive interview with the Zambian Business Times – ZBT, when reminded that he is on record announcing the 100, 000, BETUZ General Secretary Henry Sinkala, denied that he does not recall mentioning the 100, 000 teachers’ houses nor remember stating that figure.

“I do not know where that number is coming from and I don’t know who said it because we plan to construct 60, 000 houses for our teachers that are currently registered. Betuz only has about 60, 000 teachers.” He remarked.

The reduction in the number of houses and the lack of clarity on the timeline for construction have made some teachers lose hope in the promise the union made to the teachers. There have also been some allegations pointing out that the union was only making false promises and using the housing initiative as a political tool to gain support.

The promise to construct the houses was made by BETUZ in 2022, where it was touted as a major breakthrough for the country’s teaching profession.

The union had pledged to work with the government and other stakeholders to ensure that the houses were built and bought by educators over a 15-20-year period.

Meanwhile, Sinkala said the construction of the now reduced 60, 000 houses, depends on when the resources will be made available from the engaged funders of the project.

Sinkala said the union said that it had explored various funding options, including partnerships with private investors, but had been unable to secure the necessary resources as the funds have not yet been made available.

Asked why the construction had been delayed and whether it was true that the union did not have the capacity to undertake such a massive project, Sinkala denied to comment adding that he was attending to something else important.

In the turn of events, the Basic

Mpulungu Harbor defends 93% profit drop

Following audit findings that Mpulungu Harbour Corporation Limited (MHCL) Company profit dropped by 93% attributed to a reduction in cargo volume passing through the Port, MHCL has revealed that the Reduction in cargo throughput and 93% profit loss was due to Limited shipping capacity, Fuel Shortage in Burundi, Reduced export of sugar to the Great Lakes region and Low Clinker exports.

According to the auditor general’s report for the financial years ended 31st December 2021 and 2022, Mpulungu Harbour Corporation Limited (MHCL) Company’s profit reduced by 93% from over K4 million in 2021 to about K363 thousand in 2022.

The AG report also revealed that the reduction in profit was mainly attributed to a reduction in cargo volume passing through the Port from 231,000 metric tons in 2021 to 185,000 metric tons in 2022.

However according to a press query response from Mpulungu Harbour Corporation Limited (MHCL) to the Zambian Business Times – ZBT, MHCL Acting Managing Director Katowa Kabunda revealed that between 2022 and 2023 the Mpulungu Port ship calls were restricted because of inadequate cargo ship operators on the Lake amidst many competing Ports of call, a situation he said was exacerbated by the sinking of two ships in February and March 2022 which led to ship calls reducing from 308 to 267.

Kabunda said that the Persistent fuel shortages in Burundi negatively affected vessel operators’ turnaround time and calls per month.

He said that a Surge in domestic market demand for Sugar reduced quantities available for export adding that the increase in supply chain costs made the Mpulungu Corridor less attractive as an export route.

“Reduction in cargo throughput and net profit was a result of the following factors; a) Limited shipping capacity – Mpulungu Port ship calls are restricted because of inadequate cargo ship operators on the Lake amidst many competing Ports of call. This situation was exacerbated by the sinking of two ships (2,200Mt lost capacity per ship call) in February and March 2022. As a consequence, ship calls were reduced from 308 to 267 between 2022 and 2023. b) Fuel Shortage in Burundi – Persistent fuel shortages in Burundi negatively affected vessel operators’ turnaround time and calls per month. c) Reduced export of sugar to the Great Lakes region –Surge in domestic market demand for Sugar reduced quantities available for export. In addition, the increase in supply chain costs made the Mpulungu Corridor less attractive as an export route,” he said.

Kabunda noted that the demand for Clinker dropped from 112,000 Mt (2021) to 46,000 Mt (2022), due to supply contract credit terms disagreements between Burundi Cement Company (BUCECO) and Chilanga Cement Plc following a change of ownership.

He noted that the decline in cargo volumes resulted in a significant reduction in sales revenue while fixed costs such as salaries, constituting a major portion of the company’s costs remained largely constant.

He further added that the combined effect of declining revenues and fixed costs resulted in a reduction in net profit.

“Low Clinker exports – Demand for Clinker dropped from 112,000 Mt (2021) to 46,000 Mt (2022), due to supply contract credit terms disagreements between Burundi Cement Company (BUCECO) and Chilanga Cement Plc following a change of ownership. The decline in cargo volumes resulted in a significant reduction in sales revenue while fixed costs, such as salaries, constituting a major portion of the company’s costs remained largely constant,” said Kabunda.

Following audit findings that Mpulungu Harbour Corporation