10 March 2014

Zimbabwe: U.S.$400 Million Deal for City Roads Rehab

HARARE councillors have authorised town clerk Dr Tendai Mahachi to conclude a US$400 million joint venture agreement between council and Neo Capital of South Africa for rehabilitation and maintenance of the capital's major roads.

Many city roads are now impassable because of potholes.

According to council's business committee meeting minutes of January 30 this year, a special purpose vehicle - the Harare Roads Development Company -will be created with the City of Harare holding a 51 percent stake and Neo Capital the remiander.

"Neo would contribute US$400 million for the project. The joint venture would run for a period of 30 years. The Harare Roads Development Company would get its revenue from vehicle licence and billboard activities," read the minutes.

The broader plan includes mass light rail, bus and taxi transport systems.

The environmental management committee approved the deal last year and last Thursday, the full council assented to it.

The city has about 4 000km of tarred roads with a significant proportion of the network in a woeful state due to lack of maintenance.

Neo Capital will raise funding for the project against a 30-year concession at a repayment rate of US$15 million annually.

This means the city will pay back US$450 million translating to a US$50 million return to NEO Capital at about US$1,67 million per annum.

The repayment will be guaranteed by the Ministry of Transport and Infrastructure Development through the Zimbabwe National Roads Administration account and the city's billboards account.

The Zinara account will cover US$5 million annually while the billboards account will cater for the US$10 million yearly balance.

Last year city director for engineering services Engineer Phillip Pfukwa told councillors that the proposal -- the Harare Roads Rehabilitation and Maintenance Plan -- would see the development of the Greater Harare Transportation Master Plan.

It includes the road infrastructure, a mass light-rail transit system, a bus rapid transport system and a taxi system.

The second phase of implementation will see the development and implementation of the e-TAG system, which incorporates and integrates vehicle management systems like vehicle licence, electronic monitoring and a vehicle database.

The city expects to get increased licence fees through the introduction of e-TAG.

Harare City wants US$50 million for road maintenance in this year's budget.

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