Railways in Africa. Railway Concession Experiences in Sub-Saharan Africa. Pierre Pozzo di Borgo Senior Transport Specialist Africa Region March 2005

Transcription

1 Railways in Africa Railway Concession Experiences in Sub-Saharan Africa Pierre Pozzo di Borgo Senior Transport Specialist Africa Region March

2 Why lend support to railway activities in Africa? To increase transportation alternatives To cut average transport costs To stimulate trade To spur economic growth To reduce poverty 2

3 Pros The rail infrastructure exists but is badly managed by parastatals Potential market for railways services is significant (e.g., containers, bulk) Railways face limited operational obstacles compared to trucks and offer superior transport security 3

4 Pros (cont d) Regional dimension Interface with ports Sparks competition between various means of transportation 4

5 Cons High up front investment costs to rehabilitate existing railways (track + rolling stock) Rail system in Africa is fragmented Poor transport efficiency due to unbalanced traffic patterns Road competition is heavily subsidized Governments misperceive their longterm role in the sector (see railways as cash cows) 5

6 Risks Railway investment is among the riskiest in the transport sector Need for privatization is the highest Type of Risks Political Commercial Regulatory Monetary Airports High Average/Low High Low Ports High Average/Low High Low Roads High Average High High Railways High High High High 6

7 Completed and ongoing railway privatizations Transrail 2003 Djbouti to Addis 2006 Camrail 1999 Sitarail 1995 CFCO 2005 Transgabonais 1999 ZRC 2004 KRC & URC 2006 TRC 2005 Madarail 2003 Beira 2004 MSR

8 Results so far: Positives: Traffic growth Market share gains Lower truck tariffs Much improved service quality and reliability Much improved tariff setting policies Higher employee productivity Modernized infrastructure Inversion of financial flows from/to the Government 8

9 Results so far: Negatives: Single track has created unforeseen upfront rehabilitation costs Concessionaire cannot pay for track replacement cost Government s demand for expanded passenger public Debt structure creates unsustainable financial liability after couple of years Lack of Government s oversight of the concession 9

10 Results so far: Employee productivity multiplied by 4 and 2 by Sitarail and Camrail, respectively Ton/Km/Employee (millions) Starts of CI crisis Sitarail Camrail Years 10

11 Results so far: Traffic is up by 70% at Camrail and > 300% at Sitarail 1,400 1,200 In Ton/Km - Millions 1, Starts of CI crisis Years Sitarail Camrail 11

12 Results so far: Smart tariff management allow for maximization of revenues as show by Sitarail commodity tariffs in From port/imports To port/exports Avg tariff: US cents 5.7 Avg tariff: US cents Oil Ivory Coast Oil Burkina Containers Foodstuff Cereals Cement Clinker Empty packages Livestock Cotton (bulk) Empty containers Cotton (container) US cents per Tkm

13 Results so far: Debt reimbursement profile means financial difficulties in the medium term 7 6 Interests Sitarail s debt profile 5 Principal reimbursment USD millions Starts of CI crisis

14 Results so far: Overall traffic volumes do not allow concessionaire to fully exploit track investment In US Cents/Tkm Millions of Tkm/Track km 0 0 Sitarail Madarail Transrail Camrail TRC USA Russia China Average revenue 14 Rail track usage intensity

15 Results so far: Overall financial results are mixed with high return on equity (>20%) not matched by low overall profitability (5-10%) 30% Sitarail s financial results 50 20% 45 10% 0% -10% In USD millions -20% 25-30% 20 Net income margin Net cash flow margin Revenues 15

16 Conclusions (1) Reliable assessment of infrastructure conditions Royalties are an obstacle to financing replacements High royalties are not the optimal solution Economic stability and long term perspective 16

17 Conclusions (2) Assigning responsibilities concerning infrastructure replacement and maintenance Role played by donors Performance guarantees Partial risk guarantees Reinforcement of committees responsible for follow-up Intermodal regulation Clear, transparent tariff setting 17