Malawi Government no longer in control of its rail transportation system; Belongs to Brazilian and Mozambican entities

The corporate colours of Malawi Railways

* Mozambican company CEAR bought 20-year concession of the government corporation in December 1999

* CEAR, Vale, Nacala Logistics, Mota-Engil now part of extended concession period from 2013 to 2046

* Ministry of Transport evasive to come out clear and confirm if indeed true CEAR was sold to Nacala Logistics owned by Vale

* You may wish to engage the respective companies to get clarity on their relationship—Ministry PRO Liwewe

By Duncan Mlanjira

President Lazarus Chakwera keeps championing for the resuscitation of Malawi’s railway transport system, but it seems its benefits would only be much enjoyed by foreign business entities, who own and manage it.



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Our source privy to the arrangement, coupled with our own search, indicate that in December 1999, Mozambican company — Central East African Railways (CEAR) — bought the government corporation, Malawi Railways to manage as a concession.

The source said later the Board that had government representation on it, approved sale of the company to CEAR, yet recently guaranteed a loan of almost US$2.1 billion for the rail rehabilitation.

Corporate colours of CEAR

CEAR then was facilitated to be in partnership with Brazilian company, Vale which Malawi government had approved it to build a new railway from Moatize in Mozambique to pass through Malawi soil up to Nayuchi, the boarder back into Mozambique for its Nacala Indian Ocean Port.

The partnership CEAR has with Vale over the Moatize-Nacala route — together with its subsidiary Mota-Engil that created Nacala Logistics — was enhanced further to rehabilitate the decaying state of the whole national rail network in Malawi.

This, according to our source, led to the government guaranteeing the loan to rehabilitate that rail network but it is feared that if the whole arrangement would fail, the Malawi Government will have to pay.

“It’s a murky world,” said our source. “Our technocrat civil servants seem not to see the bigger picture because huge corporate finance is heavily underdeveloped in Malawi.”

When contacted to clarify a few issues, Wezi Kalua, communications officer for Nacala Logistics Malawi, confirmed that in 1999, CEAR took over the management and operations of Malawi Railways through a concession agreement with the government.

“Under this concession, CEAR has the obligation to manage and operate the railway line, including running a passenger train service,” she said. “CEAR and government of Malawi signed this agreement and there are obligations that CEAR has to follow as part of this agreement.

“Nacala Logistics is a brand name for a group of companies — CEAR, CDN, CLN, CLA & VLL) that operate on the Nacala Corridor [and] Vale is the shareholder for CEAR and the corridor companies.”

She, however, could not confirm that Vale owns Mota-Engil in relation to the rehabilitation of Marka-Bangula rail line which was awarded to the Brazilian company but a restrain order was issued by the Anti-Corruption Bureau (ACB) over a complaint of irregularities in the bidding process that bordered on corrupt practices.

“I cannot speak on behalf of Mota-Engil on the issue of Marka-Bangula — I speak on behalf of CEAR and Nacala Logistics.,” she said. “The rehabilitation of Marka-Bangula line is the responsibility of the government of Malawi.”

The Moatize to Nacala corridor constructed by Mota-Engil

When contacted, PRO for Ministry of Transport and Public Works, Ganizani Liwewe said the concession given to CEAR in 1999 for the management and operations of railway infrastructure was for an initial period of 20 years.

It was then revised in 2013 resulting in its extension period up to 2046 with operations covering both freight and passenger transportation.

When asked to confirm if the CEAR arrangement with Malawi government is no longer in existence, and/or if the government is enjoying fruits of the CEAR, Nacala Logistics and Vale set up, Liwewe referred us “to engage the companies to clarify on their relationship”.

He was also evasive to come out clear and confirm if indeed true that CEAR was sold to the Mozambican Nacala Logistics owned by Vale — also referring us “to engage the respective companies to get clarity on their relationship”.

Rail line from Moatize passing through Nkaya

He only said: “Government has separate concession agreements with CEAR and Vale Logistics Limited (VLL).

“CEAR manages and operates the railway line that was in existence in 1999 whereas the Agreement with VLL was a build, operate and transfer for the 136.5km railway section between Kachaso and Nkaya that was constructed between 2012 and 2014 by VLL.”

The history of Malawi rail network, sourced through Wikipedia, indicates that upon achieving independence in 1964, Malawi — which had previously been the British protectorate on Nyasaland — inherited a network of three railways to be managed as a government corporation.

The three networks were Shire Highlands Railway from Salima, lake services on Lake Malawi and Blantyre to Port Herald (now Nsanje) through the Central African Railway as well as from Port Herald to Vila Fontes (now Caio) in Portuguese Mozambique.

Nayuchi board train station that was in disrepair before Vale came in

The network was run as a single, integrated Malawian system, even though the Trans-Zambezia Railway was located entirely on foreign territory. All of these lines were narrow gauge and single track, and the Shire Highlands Railway in particular had sharp curves and steep gradients, so the system was inadequate for heavy train loads.

Maintenance costs were high and freight volumes were low, so freight rates were up to three times those of Rhodesian and East African lines. Although costly and inefficient, the rail link to Beira remained the main bulk transport link until 1979 when it was destroyed by Renamo forces in the civil war.

By then, Malawi had its second rail link to the Mozambique port of Nacala, which is its principal route for imports and exports today.

Malawi Railways used to managed an executive coach service for Nayuchi route

From 1974 to 1979, Malawi worked with the Canadian International Development Agency (CIDA) to build 110kms of new track from Salima to Lilongwe though the Malawi-Canada Railway Project.

The 797km gauge line extends to Mchinji for the Zambian border at Chipata. At Nkaya junction, it links with the Nacala line together with the new Moatize-Nayuchi line.

The link south from Makhanga to Mozambique’s Beira corridor, which had been closed since the Mozambican Civil War, is now being rehabilitated in partnership with the Malawi Government.

The rehabilitation project is under a memorandum of understanding (MoU), which Malawi signed with the Government of Mozambique when President Chakwera visited the country in Tête in October last year.

President Nyusi with Chakwera in Mozambique last October

For the moment, freight traffic is predominantly exports through Nacala, including sugar, tobacco, pigeon peas and tea with I mport traffic consisting of fuel, fertiliser and containerised consumer goods.

A government subsidised passenger rail service operates twice weekly from Blantyre to Balaka as well as the Nayuchi border with Mozambique.

In July 2006, the Republic of China (Taiwan) donated four R20 series (EMD G12) diesel locomotives — R56, R57, R58 and R59 as Malawi Government property but managed by CEAR.

It is reported that two of them are used as shunters while the other two have never been used.

State of Nsanje-Limbe railway

Vice-President Saulos Chilima inspecting state of the rail system

Last week, amidst the furore that sorrounding the restrain order by the ACB that involved Mota-Engil, Nacala Logistics made an announcement that it has brought in bigger, heavier, more reliable and high-capacity locomotives called Dash 9, that are set to haul 120-loaded wagons at one go.

This was seen as trying to douse the fire over the controversy of the Bangula-Marka rehabilitation works to favour Mota-Engil, whose restrain order hasn’t been lifted.

Nacala Logistics said their previous locomotives were smaller and slower transporting a maximum capacity of only 53 wagons of cargo while the Dash 9 Locomotives will be able to export and import a lot of goods at once — resulting in reduced costs and more revenue as transit times will be greatly reduced from 5 to 2 days between Nacala Port and Limbe.

Nacala Logistics also announced that all maintenance works on the railway line between Limbe and Nkaya in Balaka had been completed with passenger train services resuming services from September 25.

However, the newly launched Dash 9 locomotive derailed on Saturday close to National Oil Company of Malawi (NOCMA) fuel tanks at Matindi in Blantyre.

Director of Railway Services in the Ministry of Transport, Geoffrey Francis Magwede, while confirming the incident with Times 360, could not shed more light as to what has caused the incident, referring the online to the operator, CEAR.