Name of the Project
Swazi Rail Link infrastructure project.

Location
The rail line will run between Lothair, in Mpumalanga, South Africa, and Sidvokodvo, in Swaziland.

Client
South Africa State-owned rail operator Transnet Freight Rail (TFR) and Swazi Rail.

Project Description
150 km railway line between Mpumalanga, in South Africa, and Sidvokodvo, in Swaziland, and revamping two existing lines – Ermelo to Lothair, in South Africa, and Sidvokodvo, in Swaziland, to Richards Bay, in South Africa.

The rail link will also release capacity on the coal export corridor.

According to a press release by Swazi Rail in January, the 150 km rail line will require the engineering and construction of about 222 structures. 

This includes 28 viaducts, 28 overbridges, 31 underpasses, 25 cattle creeps and 110 culverts, the majority of which will be located  in Swaziland. 

The initial feasibility study concluded in 2015 indicated that the project would require 1 218 ha – 506 ha in South Africa and 713 ha 
in Swaziland – and would result in the disruption of about 500 households and 600 grave sites.

By relieving the coal export corridor of almost all its general freight, TFR will align the rail network with the coal-handling capacity at Richards Bay to facilitate an increase in exports, initially from South Africa’s Mpumalanga coal mines, but progressively from the Waterberg, in Limpopo, and eventually also from neighbouring Botswana.

Potential Job Creation
During construction it is estimated that 3 000 direct construction jobs will be created in South Africa and a further 6 500 in Swaziland, where 100 km of the 150 km line will be laid.

Value
The cost of the project has been estimated at R20-billion.

Duration
Not stated.

Latest Developments
South Africa’s TFR and Swaziland Rail have confirmed that an expression of interest (EoI) for the cross-border Swazi Rail Link infrastructure project will be released to potential investors before the end of this year.

At a joint briefing in Gauteng, South Africa, on October 19, Swaziland Rail CEO Stephenson Ngubane and TFR CEO Ravi Nair said the project feasibility study had been completed and that work was under way to package the project for presentation to private investors.

Transnet is acquiring the 506 ha required for the project on the South African side of the border and is in discussions with communities on the relocation of several households.

Swaziland, meanwhile, is in talks with 15 chiefdoms regarding the relocation of 235 homesteads to make way for the project.

About 500 graves in Swaziland have been exhumed and the bodies reburied, while Transnet is in talks regarding the exhumation of 120 graves.

All environmental permits and a water use licence have been secured, and early-stage discussions with potential customers are under way.

Responses to the EoI will help inform a subsequent request for proposals (RfP) document, but the two utility partners currently envisage packaging the project as a special-purpose vehicle (SPV), rather than a concession.

“We are not being prescriptive about the type of model, but, in our view, it is unlikely to be a concession. Where TFR needs to operate, we will operate. 

“Where Swazi Rail needs to operate, they will operate,” Nair noted, adding that they are, nevertheless, looking for private funders to take direct equity in the project.

“The model we are working on now is the SPV. What does that mean? It means that we are looking to attract project financing and that the revenue generated will be used to pay back investors and meet operating costs. After maybe 20 or 25 years, or when the loans have been repaid, the SPV would dissolve,” Ngubane averred.

However, he emphasised that the model is continually being refined.

The SPV model is also preferred because the project, which will be seamless, despite traversing country borders, already involves two rail operators, covers a relatively short distance and will integrate with existing infrastructure.

The infrastructure will also need to traverse challenging – and, at times, mountainous – terrain, and its construction is expected to comprise no fewer than 300 separate civil engineering works, including bridges and culverts.

Nevertheless, Nair is confident that the project will attract private investors, as there are immediate volumes that could be diverted to the line. 

Yearly volumes are expected to ramp up to 22-million tons over time.

The logistics and efficiency spin-offs associated with having dedicated 150-wagon general-freight trains will also be significant, as will the socioeconomic and employment benefits. These socioeconomic aspects will be marketed to potential development finance partners, including the New Development Bank, which attended a presentation on the project during the ninth Brics Summit, held in Xiamen, China, in September.

The RfP should be released in the first half of 2018 and Swazi Rail and TFR expect the project to reach financial close two years later.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
TFR spokesperson Mike Asefovitz, tel +27 11 544 9585.
Swazi Rail, tel +268 2411 7400 or email info@swazirail.co.sz.