RSZ deal the worst - Hachipuka

RSZ deal the worst - Hachipuka
By Moses Kuwema and Chiwoyu Sinyangwe
Tue 11 Sep. 2012, 10:29 CAT

Emmanuel Hachipuka says the concession agreement that the government signed with the Railway Systems of Zambia (RSZ) is the worst. And the government has decided to compulsorily acquire all the concession rights that were granted to RSZ.

Hachipuka, a former Zambia Railways managing director who is also former UPND Mbabala member of parliament, said the concession agreement was very badly negotiated by the government.

"I cannot understand how that kind of an agreement can be done by technocrats and approved by government. I have never seen anything in all my working life similar to that concession agreement. It has been very painful to me. I have visited Zambia Railways and there is nothing to write home about. The state of Zambian Railways is very sad compared to our days. We were running daily trains, two passenger trains a day. We were carrying over five million tonnes per annum. Look at what has happened now? I don't think they are doing more than 500 tonnes per annum, it is very sad," he said.

Hachipuka said amongst the privatisation processes that the country had undertaken, the concession agreement was the worst and supported the government's move to terminate the agreement.

"I have never seen anybody run an entity of this magnitude the way it has been run. I fully support that," he said.

And Hachipuka called on the government to publish the concession agreement to enable those who were critical of the government's stance understand the issues surrounding the agreement.

On the way forward after the termination of the agreement, Hachipuka said: "I think the government will position itself to privatise it again properly. If they choose to take the route of running the railway line, just as is the case world over, they can do it. The tax payer should pay for the railways and there is nothing wrong with that. Whatever route they can take is okay, provided they don't go back into another concession similar to the current one."

In his address to the nation at ZNBC studios yesterday, finance minister Alexander Chikwanda said Cabinet had decided to acquire the concession rights that were granted to the Railway Systems of Zambia Limited in accordance with its mandate to safeguard the interest of Zambians.

"As a consequence of the compulsory acquisition, the freight and passenger concession agreement (CA) with the Railway Systems of Zambia (RSZ) has been terminated and Zambia Railways Limited will with immediate effect take over the operations and management of the railway network that was the subject of the concession agreement," he said.

Chikwanda said the compulsory acquisition of the concession rights was necessitated by the RSZ's consistent acting in a manner that was prejudicial to the interest of the nation through mismanagement of Zambia Railways infrastructure and rolling stock.

He said this in turn had led to the deterioration of Zambia Railways assets and resultant loss to the nation as a whole. Chikwanda said the objectives of the concession had been abandoned and those included the inter-mine network, resulting in heavy inter-mine cargo moving by road.

He said other objectives that had not been met include, a reduction in the cost of railway transportation, saying under RSZ, railway transport had become costly to use as compared to road transport and that this had resulted in minimal or non-utilisation of rail transportation.

RSZ head of corporate affairs Charles Phiri refused to comment over the government's decision to terminate the concession agreement.

The concession of Zambia Railways assets and operations was awarded to RSZ in 2003 for a period of 20 years in respect of freight business and seven years for the passenger business.

The concession covered the whole inter-mine railway network on the Copperbelt as well as the long haul railway from the Copperbelt Province to Livingstone.

Among the objectives of the concession was to ensure that RSZ contributed towards the efficient transportation of goods and passengers at affordable rates.

This in turn would have transferred heavy cargo from road to rail, thereby reducing congestion by trucks on Zambia's high ways as well as reducing the road maintenance costs.

The concession agreement stated that in the event that government and/or ZRL terminates the agreement as a result of a RSZ event of default, then RSZ shall hand back the railway estate and moveable assets on the date of the termination pursuant to government and or ZRL offer for sale to government and/or ZRL, on the basis of a first right of refusal.

The agreement stated that any other RSZ assets not referred to above surrender the Railway permit, assign the contracts to GRZ or its designees, and RSZ shall, without limitation to GRZ and or ZRL's rights under the bank guarantee or guarantor's guarantee but at no time allowing GRZ and/or ZRL to recover the same loss twice pay GRZ the RSZ default amount and the total of unpaid arrears of the concession fees.

"The exercise of the right of a party to terminate this agreement as provided herein does not include the party from exercising other remedies that are provided herein or area available under the laws of Zambia," according to the agreement. "Remedies are cumulative, and the exercise of, or failure to exercise one or more remedy by a party shall not limit or preclude the exercise of or constitute a waiver of any other remedies by that party, provided that no party shall have any right to terminate this agreement other than in accordance with the express provisions of this agreement."

The agreement stated that the notice of intent to terminate shall specify in sufficient detail to RSZ the grounds for termination of the contract.

"The notice of intent to terminate shall specify in sufficient detail to RSZ event of default or GRZ and or ZRL event of default as the case may be given to raise such notice," the concession agreement read in part.

"Upon the occurrence of a GRZ and/or ZRL Event of Default or a RSZ Event of Default, as the case may be that is by its nature not capable of remedy (and where the effects cannot be compensated for by the payment of money) or which, if it capable or remedy, is not cured within the applicable period, the non defaulting party may, at its option initiate termination of this agreement by delivery a notice of its intent to terminate this agreement."