By OLIVER SAMBOKO
GOVERNMENT and the concessionaire for the Lusaka-Ndola dual carriageway have agreed to a revenue-sharing mechanism based on gross revenue at between 1.5 to 15 percent of the gross revenues over the concession period.
Infrastructure, Housing and Urban Development Minister Charles Milupi said in Parliament on Tuesday that Government envisions to accrue US$1,172,157,616.00 in monetary benefits from the project.
He also said under the concession agreement to finance, construct, operate, and maintain 327 kilometres of the Lusaka-Ndola dual carriageway project, and rehabilitation of 45 kilometres of the Luanshya-Fisenge-Masangano, government shall have the right to audit all accounts and examine all books and other documents relating to the agreement.
Mr Milupi said while the demand for quality road infrastructure remain high, the new dawn government decided to enter into a PPP arrangement in the construction of the Lusaka/ Ndola Dual carriageway because the resource envelope is not adequate to bridge the financing gap.
He said the road project is anticipated to generate jobs, as well as spur social and economic growth.
Mr Milupi said the financing model will also guarantee infrastructure development and service delivery using private capital given the current challenging fiscal position of the country which was as a result of both the poor performance of the economy, and the huge and expensive debt left by the previous administration.
He disclosed that government owes over K10 billion kwacha in outstanding arrears to contractors and consultants accumulated by the previous government, and loans amounting to K5.2 billion obtained from NAPSA, NATSAVE and indo Zambia Bank.
Mr Milupi disclosed that the loan tenure for NAPSA alone is 15 years, and that servicing these commitments was currently taking away 40 percent of the road sector budget annually.
He however said the unfortunate thing is that the current debt portfolio was not matching the current condition of the road network in the country.
‘’However, despite this indebtedness, 80 percent of the road network remains in poor state,’’ Mr Milupi said.
He said those condemning the new dawn government for settling for 25 year concession are not sincere considering that the previous government attempted to award the same road at the estimated cost of US$ 667, 800,068.00 with a concession period of 34 years.
He explained that after the 34 years concession deal failed, the PF administration later commenced another process that resulted in the award of the contract at an exorbitant price of US 1.245 billion using the contractor facilitated initiative model of financing.
He also explained that the new dawn government decided to concession the road for 25 years in order to allow reduction in toll fees paid by the motorist which would have not been possible if the period was shorter.
“We can also shorten the concession period, but that will result in us increasing the toll fees which would have made the toll fees unaffordable to the average Zambian and increase the cost of doing business,’’ Mr Milupi said
Mr Milupi told parliament that funding mechanisms for the project are entirely the responsibility of the concessionaire, and that government will not provide any assistance or sovereign guarantee adding that the concessionaire is free to approach any interested investors within and outside Zambia.
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