1. Revitalizing the Railway Network Serving the Lake Tanganyika Basin
Development Conference
28 November, 2011
Revitalizing the Railway Network Serving the Lake Tanganyika Basin
George Wolf
Infrastructure Director, TradeMark East Africa

2. Main themes
The Current Situation
Proposed Projects to Revitalize Rail
Proposed Business Models

3. Road transport between LT Basin and the sea is lengthy and expensive
$3,405
16.5 days
$5,102
25 days
$2,315
13.5 dys
$4,728
18.9 days
$3,028
16.5 days
$5,782
20 days
Northern Corridor
Central Corridor
North-South (Durban/Uhuru) Corridor

4. Yet the vast majority of corridor traffic uses the road network
Total Traffic on Northern and Central Corridors (2009): nearly 29 mm tons

5. Numerous railways serve the LT Basin, but all are underutilized
RVR
SNCC
TRC
TAZARA
CFB
NRZ
CDN
TFR

6. Rail’s natural advantage
Cost and Time of Exporting a Light Container (2010)
Rail transport costs slightly less than road transport
Rail’s cost advantage greater with distance
But time is significantly greater (and reliability is poor)

7. Proposed projects to revitalize and expand railways serving LT Basin
Tanzania Railways Co (TRC): Kigoma to Dar es Salaam
Narrow gauge (max capacity 5-10 mmtpa)
Requires at least $300mm to rehabilitate to financial/operational sustainability
World Bank investing $150mm, more possible later
Not a good candidate for private investment in near future
New Bujumbura-Uvinza line (connect to TRC)
New Kigali-Kabale-Buhanga line (connect to RVR)
Both proposed in EAC Master Plan 2009

8. Proposed projects to revitalize and expand railways serving LT Basin
Societe Nationale des Chemins de Fer (SNCC) – Kalemie to DRC borders with Angola, Zambia
Access to:
Dar es Salaam (via TAZARA)
Lobito (via CFB, currently closed)
Durban (via NRZ, TFR)
Majority of traffic is in southern copper belt
World Bank investing in rehabilitation of line, mostly in the south
Now under private management as condition of World Bank program (but no private investment)

9. Proposed projects to revitalize and expand railways serving LT Basin
Dar-Isaka-Kigali-Musongati Project
Upgraded/new standard gauge line from Dar es Salaam to Musongati (via Keza) and Kigali (via Isaka)
DB International 2009 feasibility study (AfDB funded)
Projected Traffic: up to 16 mmtpa by 2044
Total capital cost: $3.7 billion
Total Benefits: $53 billion (optimistic scenario)
EIRR: 31% (optimistic scenario)
BNSF study 2009 (USTDA funded) proposed AREMA
Greater freight capacity at lower cost
More detailed design about to commence (AfDB funded)
TZ-RW-BU Secretariat established to prepare project

10. The two best options for LT Basin railway access
Revitalization of TRC Line to Kigoma
Economic Rationale
Recapture natural rail customers and historical rail market share
Pros
Existing system
Cheaper to rehabilitate
Faster to implement
Utilizes lake transport
Cons
Max capacity limited
After RITES concession, private investment unlikely in near future
New Dar-Kigali-Musongati Network
Make new productive sectors economically viable
Max capacity much larger
Transformative impact of new productive sectors (e.g. mining)
Much more expensive
Probably many years off
Requires multi-country coordination

11. Possible business models
Full public ownership and operation – has not worked well for any of the regional railways
Full concession – difficult to get right (see TRC, original RVR) but can work (restructured RVR)
Public ownership and operation with private management – likely to be an intermediate step for revitalizations (e.g. SNCC, TRC)
Open access rail network – increasingly proposed as viable business model

12. An open access rail network
Public sector owns rail infrastructure
Less demand risk
Finance with concessional (MBD) loans
PPP options still possible (e.g. for O&M)
Multiple private operators allowed to own and operate rolling stock on the network
May be linked with productive sector investments (e.g. mining)
Less risk for each operator – only focuses on its sector
Overall EIRR on public investment still depends upon usage, but project does not depend upon single huge transaction

13. Financing for Dar-Kigali-Musongati project assuming open access
Tanzania Infrastructure $1,033 million
Rwanda Infrastructure $650 million
Burundi Infrastructure $1,183 million
Rolling stock (private operators) $804 million
 These are still large numbers, but much more bankable than $3.7 billion at once

14. Other considerations
Rail is not the only transport investment required to support productive sectors development in Lake Tanganyika Basin
Seaports are inefficient and over capacity
Lake transport (ports, ferries) can be rejuvenated once rail is viable
And transport is not the only infrastructure required either
Power (generation and transmission) required for mining, manufacturing, agribusiness
Water (irrigation) required for agriculture/agribusiness
Investments in these sectors will themselves become more viable as rail capacity increases

15. Thank You! Information sources:
Corridor Diagnostic Study (2011, Nathan Inc.)
Kenya-Uganda Railway TIIC Project Brief (2011, TMEA)
TAZARA TIIC Project Brief (2011, TMSA)
Dar-Isaka-Kigali-Musongati Feasibility Study (DBI, 2009)
East Africa Railways Master Plan Study (CPCS, 2009)