China Railway Signal to build robust electrified railway network in Malawi and operate it to recover what the company invested

* The project will be co-financed by the Chinese company and a sovereign wealth fund of the United Arab Emirates

* The two entities will form the build-operate-transfer (BOT), which they will run for 30 years

* And thereafter or even earlier, the Ministry of Transport & Public Works will take over

* The ambitious five-year project will extend the network from Lilongwe to Mbeya in Tanzania as the Northern Region corridor

By Duncan Mlanjira

The robust electrified railway network project which China Railway Signal & Communication Corp. International will build in Malawi is not a loan from the Chinese government but a build-operate-transfer (BOT) contract — where an investor builds the railway and operates it to recover what the investor spent, as well as make a profit.

This is according to a report by ChinAfrica.cn, saying the monumental K2.43 trillion (US$2.18 billion) agreement, signed by Minister of Transport & Public Works, Jacob Hara at the Road & Belt Forum for International Cooperation that took place in Beijing in October 2023, will be co-financed by the Chinese company and a sovereign wealth fund of the United Arab Emirates. 

The report quotes Hara as saying the two entities will form the BOT, which they will run for 30 years and thereafter or even earlier, the Ministry of Transport & Public Works will take over.

The agreement has a clause that after 30 years, China will write off all existing debts to the project and Hara indicated that the Malawi government will not pay anything, and therefore there is no need to pass the deal through Parliament. 

“It should be noted that this is not a loan, and as such, it will not reflect on government books and does not need parliament approval,” the Minister is quoted as saying, adding that the Public Private Partnership Commission (PPPC) endorsed the project as per legal requirements.

In additional to revamping the existing railway system, the ambitious five-year project will extend the network from Lilongwe to Mbeya in Tanzania as the Northern Region corridor.

The other phases are revamping the routed from Nkaya in Balaka to Bangula in Nsanje through the headquarters in Limbe with electric rail upgrades as well as connecting Nkaya to Mchinji via Salima and Kanengo in Lilongwe.

The report further says project will also include the construction of modern train stations, inland ports, the supply of cutting-edge trains and the enhancement of Malawi’s rail signalling, passenger communication, and ticketing systems.

“This endeavor aims to rejuvenate and modernize Malawi’s long-neglected rail infrastructure, positioning the country as a crucial transit hub for Zambia and the Democratic Republic of the Congo,” the Minister is quoted as saying.

“The new rail network is expected to drastically reduce cargo and passenger transport costs, ushering in a new era of connectivity and economic growth for Malawi.

The Belt and Road Initiative is a global infrastructure development strategy proposed by China’s President Xi Jinping in 2013, aiming to promote policy coordination, infrastructure connectivity, unimpeded trade, financial integration and people-to-people bonds among involved countries.

ChinAfrica.cn also talked to Geoffrey Magwede, director of railway services in the Ministry of Transport & Public Works, who said the project will not only reduce transport costs, but also cut carbon emissions.  

“The cheapest mode of transport is water,” he is quoted as saying. “But it is limited because travel is restricted to where water flows — but when you have railway transport covering the whole country and extend it to the port country of Tanzania, Malawi will be different.

“This will reduce transport costs which, in turn, reduce commodity prices, unlike the road transport the country mainly uses.” 

Malawi Institute of Engineers, chief executive officer, Arthur Wengawenga hailed the project, saying it will increase the capacity of local engineers in railway construction in the country. 

“During the process of construction, local engineers will gain knowledge as some have never built a railway line before.

“Again, we should remember that after completion, there will be the need for maintenance and surely that work will be done locally. In this way, local engineers will benefit.”

Last month, managers of Malawi rail network, Central East African Railways Company Limited (CEAR) announced that it was completing the rehabilitation of the rail from Nkaya to Kanengo.

The Limbe to Marka in Nsanje railway connects with Mozambique while the Limbe-Nkaya-Salima-Lilongwe-Mchinji connects with Zambia.

At Nkaya, the rail branches off to Nayuchi for the Entre-Lagos border post of Mozambique. There is also a rail system from Moatize in Mozambique that passes through Mwanza-Neno-Nkaya-Liwonde up to Entre-Lagos that transports coal for  Mozambique’s export.

Reacting to the resumption of the railway service between Blantyre and Lilongwe, renowned social issues commentator, Onjezani Kenani observed that the restoration of railway services from Nkaya to Kanengo “is probably the best news our nation has had pertaining to its transport sector in the last 20 years”.

“Congratulations to the Chakwera government for creating an enabling environment to ensure this is possible,” he added. “As a nation, we need projects of this kind to facilitate the movement of goods and people at a lower cost.

“This is one way we can reduce the cost of production and catalyze industrialisation. Congratulations Central East African Railways.”

Andrew Nkoloma noted that the re-introduction of railway services between Lilongwe and Blantyre will mean a lot to the transportation and agricultural sectors in the country, saying: “We cannot talk of mega farms with poor transport network between the producer and the consumer.

“Many of our rural farmers along the railway line will have a cheaper option of transporting their goods to the market. Now that railway line between Blantyre and Lilongwe has been restored, CEAR, please up your marketing strategies and bring more awareness of your convenient option.

“Railway transport is by far the cheapest especially to farmers in the rural areas. If well managed this can also be the best channel for farm produce export into neighbouring Zambia and Mozambique.”

In April, when the Parliamentary Committee on Budget & Finance toure the Shire Valley Transformation Programme (STVP) in Chikwawa to assess its progress, Project Coordinator Dr. Stanley Khaila said the railway from Njanji to Limbe is expected to play a huge role once the mega farm concept of the programme is completed.

Thus Khaila said SVTP was engaging management of rail transport to expedite with construction of the rail from Nsanje to Limbe as by September this year, Chikwawa District farmers — that are closer to the  SVTP intake — are set to be provided with water for irrigation.

He emphasised that transportation of the agricultural produce from the Lower Shire to Limbe and other parts of the country will be for value addition as cost cutting measures.

The Members of Parliament — led by its chairperson, MP for Nsanje Lalanje, Gladys Ganda — were appraised the beneficiary communities that are close to the canal’s first phase from the intake will have water flowing into their fields once the secondary pipelines are completed while contractor, Synohydro continues with its 52km stretch of canal construction.

There are two contractors on site, Condril for the construction of the intake and 6km stretch of the canal passing through Majete Game Reserve and Synohydro for the 50km distance to Lengwe National Park.

The mega canal, touted as the biggest irrigation project in sub-Saharan Africa, is 118km long up to Bangula in Nsanje District and once completed, it will provide water for irrigation to over 22,280 hectares.

The STVP also has a mega farm concept through which beneficiary farmers were trained in commercial farming and assisted to form agricultural cooperatives have been registered as commercial entities.

The farmers were trained in formulating business plans while the programme itself is identifying investor off-takers for produce processing as value addition.

Thus Khaila’s emphasis on the Programe’s engagement with management of rail transport from Nsanje to Limbe to transport agricultural produce from the Lower Shire for value addition as cost cutting measures.