Zambia Railways Limited Plans Major Investment for Future Growth
Zambia Railways Limited (ZRL) is set to secure $248 million to implement its strategic business plan for the period from 2024 to 2028. This funding will be sourced through a combination of loans from financial institutions, grants from the Zambian government and international organizations, concessional loans, and equity contributions from shareholders.
In a recent interview, Chairman Emmanuel Hachipuka outlined the company's approach to financing, which includes exploring partnerships for cost-sharing, identifying internal cost-saving measures, and selling scrap and non-performing assets. The funding will be sought both domestically and internationally. The investment will primarily focus on refurbishing railway tracks, particularly the Bwana Mukubwa-Kapiri Mposhi section, as well as repairing locomotives, including shunt locomotives, and passenger coaches. Hachipuka also announced plans to acquire ten new locomotives and to repair and rehabilitate 460 existing wagons, along with purchasing an additional 375 new wagons.
The Zambian government, which owns Zambia Railways, fully supports these initiatives. Hachipuka noted the government's commitment to revitalizing railway infrastructure through various projects, including the Lobito Railway, which connects Zambia to Angola, and the TAZARA Corridor linking Zambia to Tanzania.
Recapitalization is deemed essential for the company's sustainability, as ZRL continues to face challenges related to rolling stock and railway track conditions that hinder its performance. Hachipuka highlighted that a significant portion of the $248 million will come from grants and concessional loans, accounting for approximately 41% and 37% of the budget, respectively. This strategy aims to mitigate the company's financial risks, given its current weak balance sheet and limited debt capacity. President Hakainde Hichilema has expressed the government's dedication to collaborating with the private sector to enhance infrastructure, particularly in the rail sector.
The government is focused on expediting the revitalization of key rail corridors, such as Lobito and TAZARA, to improve connectivity to the Great Lakes Region and beyond. The Ministry of Transport is actively engaging with multilateral institutions to discuss the rehabilitation of railway infrastructure. Hachipuka emphasized that the government's objectives include improving track speed, enhancing signaling systems, and securing funding for long-term investments, all of which are vital for the future success of Zambia Railways.
