Highway costs soar

Highway costs soar

Ministry of Transport and Infrastructure Development’s permanent secretary, Munesu Munodawafa

COSTS for the planned dualisation of the 900-km Beitbridge-Harare-Chirundu highway continue to escalate, with a government official last week indicating the bill could now exceed US$2 billion.
Ministry of Transport and Infrastructure Development’s permanent secretary, Munesu Munodawafa, revealed to legislators that the project was now expected to cost US$2,2 billion, US$200 million more than the last estimate given by Transport Minister, Joram Gumbo, last year.
“There has been significant progress registered in securing funding for the dualisation, rehabilitation and upgrade of this project. We estimate that the cost for the full dualisation of the project is US$2,2 billion,” Munodawafa told members of the Parliamentary Portfolio Committee on Transport last week.
The US$2 billion itself was more than double the US$883 million that ZimHighways — a local consortium of construction firms that had been given the tender 13 years ago — had tendered for the job.
To put the latest round of increase into context, the additional US$200 million is almost equivalent to what it cost Infralink, a joint venture special purpose vehicle between the Zimbabwe National Road Administration (ZINARA) and Group Five International of South Africa to upgrade of the 800-km Plumtree-Bulawayo-Harare-Mutare highway about two years ago.
The Infralink project was financed through a US$206 million loan from the Development Bank of Southern Africa (DBSA).
The government took over the project in August last year after agreeing with ZimHighways that the company should withdraw a court case in which it was fighting government over the cancellation of its tender.
In early September, ZimHighways issued a statement in which it announced that it was withdrawing the long-running High Court case, saying it had come into an agreement with government.
“ZimHighways and the government of Zimbabwe, through the Minister of Finance have agreed as follows: ZimHighways undertakes to withdraw the matter,” the consortium announced in a press statement co-signed by Finance Minister Patrick Chinamasa.
“The withdrawal of litigation by ZimHighways is to allow the Minister both scope and free hand to initiate and undertake negotiations for an appropriate financing model for, inter alia, the upgrading and dualisation of the Beitbridge/Harare road, free from litigation.”
The consortium said in return, government had agreed to ensure local contractors, including ZimHighways, would be sub-contracted in the project.
The so-called agreement came less than a month after then transport minister, Obert Mpofu, had invited local and foreign firms to submit bids for the project, in blatant disregard of the court process. Mpofu had indicatedthat his ministry had decided to go ahead and engage new players to work on the road regardless of what the outcome of the court challenge would be.
“We have decided to say no, we cannot wait for the court case. We need to start doing something and we have already approached a number of financiers to come on board. This is our busiest road and can’t be held back forever by a court case,” Mpofu had said.
In 2003, the government awarded ZimHighways — a consortium of 14 construction firms that included Murray & Roberts Zimbabwe (now Masimba Holdings), Costain Africa (now ZCL Holdings and under judicial management), Kuchi Building Construction, Tarcon, Bitumen Construction Services (Bitcon), Joina Development Company and Southland Engineers — the tender to dualise the 900-km highway at a cost of US$883 million.
The project failed to take off due to failure by the consortium to mobilise sufficient resources. The consortium blamed this on the state of the economy then, which was beset by a hyper-inflationary scourge and widespread commodity shortages.
After the economy stabilised following dollarisation, government claimed the consortium had failed to prove it had the financial muscle to execute the project, while the consortium claimed that some senior government officials were demanding bribes.
ZimHighways also accused government of going behind its back to negotiate a separate deal with DBSA, which had agreed to finance the consortium’s project.
It was with the $206 million loan from DBSA that the government embarked on the Plumtree-Bulawayo-Harare-Mutare project.

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