Chinese Consortium Revives Copperbelt Highway Project
On 10 March 2023, it was announced that a Chinese consortium under the name Macro Ocean Investment Consortium has agreed to upgrade the Lusaka-Ndola road. The road will be upgraded in a dual-carriageway and links the Zambian capital Lusaka to the 3rd largest city Ndola in the copperbelt region.
The MOIC consists of three companies, namely AVIC International Project Engineering, Zhejiang Communications Construction Group and China Railway 7th Group. Last year, the project was cancelled due to high debt load of Zambia. In fact, Zambia cancelled loans totaling USD 1.6 billion from China EXIM Bank and Industrial and Commercial Bank of China.
Initially, China EXIM Bank provided a loan of USD 1.2 billion to upgrade the road and China Jiangxi was the main contractor. Now, the project has changed from an EPC model to a PPP model.
The Government of Zambia has not provided any sovereign guarantees and will get at least 15% from the toll collected based on a revenue-sharing agreement with the Consortium.
As per Zambian law, local content will have to reach a minimum of 20% of all works. The project will create 3000 direct jobs during construction and many other jobs and business opportunities over the concession period.
Zambia is world famous for its Copperbelt region and China has large investments in the mining sector in Zambia. Zambia derives nearly 80% of its foreign exchange from copper exports.
The new highway will greatly facilitate the transportation of the key commodity and help to better connect Zambia to DR Congo, and further on to Tanzania. Based on market survey, the road sees a traffic of more than 10,000 vehicles per day and is a key artery for the transport of copper.
The project was signed in 2017 during the presidential term of Edward Lungu and a groundbreaking ceremony was even held. However, the project came under scrutiny and criticism for its ‘agonizingly expensive’ model.
Following negotiations, the project will now be undertaken under FDBOT model with the Consortium signing a 25-year concession — 3 years for construction and 22 years of operation — with the Government of Zambia.
The project has cut out unnecessary frills with the cost revised down at USD 650 million. Two Zambian pension funds, National Pension Scheme Authority (NAPSA) and Workers Compensation Fund (WCF) have invested into the project. The 327-km highway is expected to take three years to complete.