Risk Management in Transport PPP Projects
In the Islamic Countries
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possible issue concerning the qualitative elaboration and assessment of the feasibility studies.
A study by Supporting Economic Transformation (SET) on large and mega-projects in
Mozambique reports on the lack of skilled and well-paid staff as well as sector specific
experience by APIEXwhichmay result in the possible superficial evaluation of the projects (SET,
2018). A problem that is also likely to apply to PPP initiatives in the transport sector.
Box 19 Pre-tendering studies: the Beira Railway Company Concession
In the World Bank Implementation Completion and Results Report No: ICR2154 of the
Companhia dos Caminhos de Ferro da Beira (Beira Railway Company) several lessons learned
are mentioned which relate to the problems that compromised the delivery of the PPP contract
and resulted in its termination by the government in 2011. The Beira Railway Company
concession was granted in 2004 to an SPV consisting of the private companies RITES LTD and
IRCON (owning 51% of the equity) and CFM (49% of the equity). The concession was assumed to
last for 25 years and the plan foresaw the rehabilitation of the Sena and Machipanda railway lines
interconnecting the Port of Beira with the Zambesi Valley and Zimbabwe, also establishing a link
to the Malawi Railways and the construction of a road link to Zambia at Moatize. At the end of
2011, when the concession was terminated, the rehabilitation of the Sena line had been
completed but two years in delay compared to the planned time-schedule and with additional
works required relating to signaling and traffic control related equipment. No rehabilitation
works and nomaintenance had been implemented on the Machipanda line. The rail link toMalawi
was not implemented after completion of the feasibility studies because the initiative was put on
hold since no decision was taken concerning the development of the line in Malawi to Blantyre.
The road link to Zambia was constructed. The estimated traffic on the two lines was not reached
(60% and 30% of the demand target was actually reached on the Sena and Machipanda lines in
terms of freight transport), due to inadequate strategy and planning of the PPP and deterioration
of the line conditions, particularly for the Machipanda line where maintenance had not been
performed. As of the strategy and planning related issues, the report mentions the not
appropriate consideration of the relevance of coal mining for railway projects in the definition of
the project scope and elements. As a result of the failure of this PPP, the World Bank and the
government engaged indeed in a Spatial Development Planning exercise aimed at identifying the
extraction and production sites in the country which should be appropriately considered in
transport studies for infrastructure development (the lack of consideration of this element was
however partially justified by the lack of knowledge of the sites at the time the project was
prepared).
Lack of proper attention to intermodal operations was also recognized as an issue at the planning
stage of the PPP. The concession excluded indeed from its scope the link between Dondo and Port
of Beira because it was in acceptable conditions under the technical standpoint. However this
decision neglected the functional relevance of the link for the interconnection of the Port of Beira
with the traffic coming from Tete and Moatise.