Chinese-Austrian Consortium Will Build $2.7-Billion Zimbabwe Road Expansion
Zimbabwe has signed an agreement with a Chinese-Austrian consortium to resume the delayed $2.7-billion rehabilitation and expansion of the 971-kilometer Beitbridge-Harare-Chirundu highway, which links landlocked Zimbabwe and Zambia to the ports of Durban and Richards Bay in South Africa. The agreement comes a year after a consortium that had previously won the contract withdrew a court case that halted the project.
Transport Minister Jorum Gumbo announced on Aug. 22 that the framework agreement with China Harbour Engineering Company Ltd (CHEC) and China-based Austrian company Geiger International spells out the scope of work, financing model, implementation and local-content component in the project.
CHEC is a subsidiary of China Communications Construction Co., which, together with its affiliates, was debarred in July 2011 by the World Bank for fraud during the implementation of Phase 1 of the Philippines National Roads Improvement and Management Project. CCCC will be eligible to participate in the bank’s transport sector projects after Jan. 12, 2017.
Gumbo stated that the Zimbabwean government, currently reeling under 500-billion-percent inflation, will immediately start negotiations with both CHEC and Geiger on the details of the Beitbridge-Harare section of the project, which the consortium will rehabilitate and expand via a build-own-operate model under a 20-year concession.
He stated that the next phase of Harare-Chirundu, including a ring road in Harare city, “will be implemented as a combination of loan and private-sector investment to be provided by CHEC.”
Some work has already started in drawing up the engineering, procurement and construction contracts as well as financial contracts for the project, Gumbo added, but he did not confirm when the project will break ground.
The two-lane highway is 55 years old with a 20-year design life. Running roughly north-south, it is the busiest highway in the Southern African Development Community, an economic region of 15 countries. The project to add a twin highway is slated for three years, but Gumbo said dualization could take five years. He said Zimbabwe is proposing that the contractor source 40% to 50% of the labor and construction material from the local market.
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The tender had, in 2011, been awarded to the Zimhighways consortium, which included 14 local and multinational contractors such as Murray & Roberts (South Africa), Costain (UK), Stefanutti Stocks (South Africa), Bitcon (Zimbabwe), and Stewart Scott International (South Africa) before the government terminated the contract in 2013. The government had accused Zimhighways of failing to execute the project—a claim the consortium denied, saying the government had launched separate negotiations with potential financiers behind its back. The consortium consequently filed a lawsuit, but withdrew the court case in 2015 to allow the government to launch new negotiations with other contractors.
Zimhighways stated in September 2015 that the withdraw of the suit was to “allow the Finance minister the scope and free hand to initiate and undertake negotiations for an appropriate financing model for the upgrading and dualization of Beitbridge-Harare road free from litigation.”
