LOT N° 2: REQUEST N°

SPECIFIC TERMS OF REFERENCE FEASIBILITY FOR THE DEVELOPMENT OF AN INTERMODAL DRY PORT IN CHIPATA, ZAMBIA

1. BACKGROUND

1.1 Sugar Reform

The sugar industry plays a crucial role in the Zambian economy. The industry provides an important source of income ands employment in rural areas, as well as foreign exchange, thanks to the sale of large proportion of the industry's output to export destinations, including the EU. In Zambia, the sugar sector contributes to 3-4% of the GDP and 6% of the National Export Earnings1. As a low cost producer, the sugar industry has the potential to increase its contribution to Zambia's socio- economic development.

The 2006 EU sugar sector reform has involved a reduction of EU sugar prices and has required significant adjustment in ACP countries signatories to the Sugar Protocol, which was providing duty free access for sugar, at a guaranteed price. In the light of the reform, Zambia has initiated a reorientation and restructuring of its sugar industry. An adaptation strategy for the Sugar Industry in Zambia has been developed in 2006. It sets out relevant projects that will consolidate and improve the future competitiveness of the Sugar Industry in Zambia. The main areas of intervention include: • The expansion of sugar production through Outgrower Schemes; • A diversification strategy: particularly based on ethanol production for fuel blending and gel fuel, and encouragement of the co-generation of electricity; • The facilitation of improvements to and cost reductions on sugar trade routes; • The development of a sugar trade policy.

On this basis, the European Commission has allocated €562,000 to Zambia as "Accompanying measures 2006 for Sugar Protocol Countries".

The Government of Zambia wishes to procure the services of a consultancy firm to carry out a feasibility study to determine the viability of establishing a dry port at Chipata to complement the Chipata-Mchinji railway line and strengthen the Nacala Corridor transport route. This study is funded under the Sugar Accompanying Measures and it is intended that the outputs from it will contribute to the facilitation and cost reduction on sugar trade routes as foreseen in the Accompanying Measures especially in the context of the Nacala Corridor.

1 "Action Plan for the Zambian Sugar Industry" LMC International Ltd, March 2006

1 1.2 Transport infrastructures

Zambia is landlocked and shares borders with Malawi, Zimbabwe, Tanzania, Mozambique, Botswana, Namibia, Democratic Republic of Congo and Angola. The colonial Government constructed main roads and railways from north to south, passing through neighbouring countries in order to transport copper to the sea ports in South Africa, Angola and Mozambique. Thus, construction of international links was export oriented as opposed to one of creating Zambia as an economic hub in the region. During the post-independence era Zambia continued to use the same network for its imports and exports.

The historical pattern of transport development has influenced the development of the current transport system in the country. Zambia continues to use the road and railway network as the main modes of transport for its imports and exports through neighbouring countries to the ports of Dar es Salaam, Durban and to a lesser extent Walvis Bay and others. Given the country's geographical position, the government has realised that its location can serve as a hub of economic development in the region, as most of its neighbours’ transit through it. The Government acknowledged that transportation plays a key role in the development of a modern industrial society, through multi-modal systems operated through various forms of infrastructure including roads, railways, air, inland waterways and pipelines. As a consequence, the Government has taken steps to reform the transport sector and intends to construct railway links with neighbouring countries in order for Zambia to have other alternative routes to the sea ports.

The Chipata-Mchinji railway project was conceived in 1982 as a bilateral project between Zambia and Malawi to connect Zambia via Malawi to the Port of Nacala in Mozambique. The Government of Malawi with the assistance of the Canadian Government completed their portion of the railway line in 1984, whilst the Zambian Government could not complete the construction of the line from the time the project started in 1982 due to lack of funds.

As part of the Nacala Corridor being developed by Malawi, Mozambique and Zambia, the Government of Zambia appointed Zambia Railways Limited in April 2006 to construct the missing Zambian part in the railway line. The project involves linking Chipata to the Malawian Railway System at Mchinji for onward connection to the Mozambican railway system and to the Port of Nacala. This corridor provides the shortest route for the eastern part of Zambia to the Middle East and the Far East through the deep-water port at Nacala and is being considered as a indicative export route for sugar producers.

To date the following studies and works have been completed or are in progress: 9 Pre-feasibility study for the proposed Chipata Dryport 9 the railway formation which was idle for 25 years was overgrown with trees and grass and this has since been cleared and prepared and drainage structures completed; 9 the Chipata railway station building and a siding have been constructed (1982- 1984), but remain to be rehabilitated. 9 mobilisation and movement to site of 80lb (pounds) rails to cover the full length of the track length has been nearly completed;

2 9 earth and drainage works; 9 ballast has been laid with a balance now on order; 9 concrete sleepers have been delivered and a small balance remains (on order); 9 Approximately four kilometres of the track remain to be laid; 9 railway crossing on the Chipata – Mwami road still need to be constructed; 9 laying of the remainder of the track will continue as the remaining ballast, concrete sleepers and track is delivered; and 9 completion of the project set for the end of the third quarter of 2008.

Further technical details are in Annex 1 to this Terms of Reference.

2. DESCRIPTION OF THE ASSIGNMENT

2.1 Global Objective

The overall objective of this study is to contribute to optimising the flow of goods, to and from Zambia through the Nacala Corridor and thus to contribute to the facilitation and cost reduction on sugar trade routes as foreseen in the Sugar Accompanying Measures.

2.2 Specific Objectives

This feasibility study is integrated with studies and works to be carried out on the Great East Road under 9th and 10th EDF infrastructure programmes.

The specific objectives of the study are:

i) to evaluate the feasibility of constructing a dry port and access road for the Chipata/Mchinji Railway Project which would cater for a variety of cargoes (such as cotton, sugar, tobacco and possibly mining and other products), to be transported through the Nacala Corridor; ii) to verify that the legal, institutional and operational status of the railway and port systems between Chipata and Nacala will permit the free and sustained flow of goods through the system to meet demand; iii) to develop preliminary plans and cost estimates for the dry port and an associated business plan for the entity.

2.3 Expected Services, including suggested methodology

The team will work closely with the Ministry of Communications and Transport (MCT) through the Director of Planning and Information. He will provide the Consultants with all information relevant to this study, including previous consultancy studies on the Chipata Dry Port, trade flow information, transport infrastructure information, rail concession system information, cadastral and other survey information and designs for the Chipata-Mchinji railway, Chipata station and the proposed dry port, and so on.

The team will specifically:

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1. anticipate, justify and quantify the types of cargo to be handled by the proposed Chipata Dry Port; a. Road - the recent historical, present and 10-year projected outbound and inbound road cargo volumes passing through Chipata; b. Rail – the historical and present volume of Zambian, Malawian and Mozambique outbound and inbound cargo using the Central and Eastern African Railway (CEAR) system through Malawi and Mozambique, by type; c. Cargo - projected daily tonnage of cargo likely to use the Chipata Dry Port, by type of cargo and modal source (outbound d from road, to road and rail; inbound from road and rail to road), giving specific assumptions made;

2. determine the space requirements at Chipata Dry Port site necessary to handle the peak daily cargo storage needs of different categories of cargo (containers, covered storage, fuel tanks, etc);

3. determine the rail, road and other infrastructural and space linkages between the Dry Port and the Chipata Station, indicating whether these are being, or are anticipated to be, funded by Government or others;

4. determine the equipment needed immediately to handle cargo movements through Chipata Dry Port;

5. identify and specify the expected additional equipment needed for the dry port, and the timing of such needs, to meet projected growth over the next 10 years;

6. prepare an outline layout design for the Chipata Dry Port indicating storage, parking, logistical and queuing options;

7. determine the operating cost for the Dry Port;

8. prepare a cost, construction time estimate and financing programme for delivery of a functioning Dry Port, broken down by implementing party;

9. state the lead times necessary to meet the infrastructural and other elements of the dry port establishment (date of arrival of the railway from Mchinji, construction times for access roads, power etc);

10. determine the routing and financial opportunity cost factors for Zambian cargo routing through Chipata to/from Nacala Port over Beira and Durban;

11. determine the tonne/km price differential for the road and rail transport systems to/from Nacala and what impact may this have on the modal split of cargo transport;

12. develop a business plan for the Chipata Dry Port for a 10 year period;

13. present the financial and economic viability of the proposed Chipata Dry Port;

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14. describe possible scenarios for the management of the Chipata Dry Port, identifying the strengths and weaknesses of each option;

15. state the legal, administrative, maintenance and management issues that require completion, decisions and/or formal agreements before the rail link from Chipata through Malawi and Mozambique and adequate capacity at Nacala Port are assured, in each case stating the responsible party and anticipated timeframe.

The study will comprise:

¾ a Lusaka-based desk study of the Zambian import and export cargo system through Chipata and the Nacala;

¾ telephone or e-mail-based interviews, and discussions with relevant sources of information and debate;

¾ a field visit to Chipata to to assess preliminary plans and assumptions, to collect on-site data and meet potential local stakeholders. Further short visits may also be required;

¾ a visit to Malawi - with the prior approval of the Contracting Authority - and with technical experts from the Ministry of Communications Transport to confirm issues related to: • the rail concession systems, and its present and projected capacity and efficiency; • inter-governmental issues related to the performance of the Nacala Corridor.

The NAO will work with the Steering Committee for 'Accompanying measures for Sugar protocol Countries', which includes key stakeholders (NAO, Ministry of Communications and Transport, Ministry of Commerce, Trade and Industry, Delegation of the European Commission etc).

When in the field the Consultant is advised to work closely with Provincial and Council Officers and the Zambia Railways representative.

2.4 Required Outputs

The Consultant will deliver a report that covers the material scheduled above, to addresses the Objectives of this study set out in Sections 2.1 and 2.2 above and the detailed tasks set out in Section 2.3.

Due attention will be given to delivering the following outputs:

i) information on the present and project cargo volumes and the mixture of those cargoes by material type and cargo format (with stated assumptions);

5 ii) projections on the proportion of cargo that would be moved by road and rail and therefore of the volume of cargo likely to use the proposed dry port/inland container terminal at Chipata, under various regional transport scenarios; iii) the financial cost comparisons (and projections thereof under stated assumptions), of road freight and combined rail/road freight (including the transhipment costs associated with the proposed dry port) for transport through the Nacala Corridor; iv) the planning, development and operating cost estimates for the proposed dry port (under stated logistical, planning, cost and cargo projection assumptions, including time scenarios); v) possible financing and management models for the dry port; vi) a business plan and investment analysis for the proposed dry port over a ten year investment horizon (under clearly stated assumptions); and vii. advice to government on all legal matters relating to the management and use of the dry port facility and the rail link to Nacala port;

3. EXPERTS' PROFILE

3.1 Number of requested experts per category and number of man-days per expert

• A Category I expert - Team Leader : 51 man-days

• A Category I Expert - Cargo/Logistics: 27 man-days

• A Category II expert - Civil Engineer: 29 man-days

• A Category III Expert – Transport: 22 man-days

3.2 Profile and Expertise Required i) Category I expert - Team Leader: ¾ relevant academic qualification in transport economics, preferably at Masters’ degree level, ¾ at least 15 years’ experience in corridor routes and associated road/rail inter- modal facilities, preferably in Africa; ii) Category I Expert - Cargo/Logistics: ¾ at least 15 years’ experience in inter-modal facilities in Africa ¾ knowledge of import and export trade in southern or eastern Africa.

iii) A Category II expert - Civil Engineer ¾ at least 10 years’ experience in road/rail engineering; ¾ demonstrated experience in inter-modal facilities in Africa; and

iv) A Category III Expert – Transport ¾ at least 5 years’ post-graduate experience; ¾ Good local knowledge of the Zambian road and rail transport systems;

6 ¾ Knowledge in ChiNyanja is an advantage.

The four experts will have to be fluent in English, both reading and writing.

3.3 Working Language

The working language for this study will be English.

4. LOCATION AND DURATION

4.1 Starting Period

The study is expected to commence 15th October 2008.

4.2 Foreseen finishing period or duration

The maximum total duration is 150 calendar days including start-up period, performance period, reporting, submission of comments and submission of final report (15th March 2009).

4.3 Planning

The tentative time schedule of the expert is indicated below. However the contractor may propose changes where felt necessary.

Activity Experts (man-days) Location Team Cargo/Logistics Civil Engineer Transport Leader Expert (Cat I) Expert (Cat II) Expert (Cat I) (Cat III) 1. Preparatory stage 12 2 2 7 Lusaka 2. Field work 9 9 6 6 Chipata/Malawi 3. Analysis and 22 15 20 8 Lusaka reporting 4. Presentation of draft 1 0 0 1 Lusaka to the relevant stakeholders 5. Final reporting 5 1 1 0 Place of preparation residence 6. Final report 2 0 0 0 Lusaka presentation Total 51 27 29 22

4.4 Location for the Assignment

The Consultants will work from their office based in Lusaka for the duration of the assignment, excepting: i) a planned team field visit to Chipata for approximately one week; ii) a possible short consultation and clarification visit to Malawi by the Team

7 Leader with representatives of the Ministry of Communications and Transport; and iii) the Final Report completion.

4. REPORTING

The Inception, Draft and Final Reports will all be presented by the Team Leader in PowerPoint format, as well as in the hard and electronic copies specified below, to a Supervisory Group selected and organised by the NAO with the Ministry of Communications and Transport and including the EC Delegation and others.

All reports will be formally presented to the NAO and the EC Delegation.

5.1 Content

The Consultants will present three reports: an Inception Report; a Draft Report; and a Final Report.

The Inception Report will be presented in PowerPoint and hard copy formats and will set out: • the methodological approach for the study; • a preliminary project assessment; • a detailed work programme indicating the inputs of the various experts and specifically itemising the visits to Chipata (and possible visit to Malawi); • any areas of concern (missing data, policy decisions, etc.) requiring decisions or action from the MCT.

The Draft Report will be presented in PowerPoint, hard copy and electronic (e- mailed files) copy formats and will include: • the major findings and recommendations; • the project description; • the cost estimates and financial and economic analyses; • the overall feasibility findings; • any areas warranting decisions from the MCT prior to finalising report.

The Final Report will be presented in hard (report and drawings/maps), and electronic (CD) copies in an accessible format. It will represent the Consultant’s final professional opinion on the project after due consideration of comments raised through the Contracting Authority.

All reports will be formally presented to the NAO and the EC Delegation.

5.2 Language

All reports will be in English.

5.3 Submission/Comments timing a) Inception Report presented within two (2) weeks of commencement.

8 b) Draft Report presented at the end of the desk and field study. Comments from the Contracting Authority will be sent within 15 days from reception of the draft.

c) Final Report to be presented by the Team Leader in Lusaka within 10 days from receiving comments from the Contracting Authority.

5.4 Number of Copies

The reports will be delivered as shown below:

Report Format Numbers Recipients Inception Report PowerPoint presentation only 1 Steering Committee Draft Report Hard copies 10 NAO/EC Delegation Electronic copies (CD) 1 NAO/EC Delegation Final Report Hard copies 10 NAO/EC Delegation Electronic copies (CD) 10 NAO/EC Delegation

6. ADMINISTRATIVE INFORMATION

6.1 Other authorised items to foresee under ‘Reimbursable’

Reimbursement will be made against the following foreseen items:

• International air tickets; • Per diem for experts; • Field trip transportation (car hire); • Printing of maps and plans.

6.2 Tax and VAT arrangement

Under no circumstances can VAT be paid by a Community programme. However, framework contractors are invited to obtain information from the EC Delegations in the beneficiary countries concerning reimbursement procedures or possible exemption from VAT.

9 ANNEX 1

SUPPORTING INFORMATION

1. Description of Chipata Dry Port Site

The Chipata Dry Port site will be located at the end of an extension of the Chipata-Mchinji railway reserve, west of the existing railway station in a plot measuring 6 km in length and 90 metres in width.

Status of Title Land has already been acquired and the Ministry of Lands is in the process of issuing the title for the Chipata-Mchinji railway strip. The title is expected to be issued before the end of 2007.

Existing Infrastructure Investments There is no existing infrastructure for the dry port, or immediately planned investments.

2. Infrastructure Facilities Servicing the Dry Port Area

Roads An access road about 6 km long will have to be constructed from the Great East Road to the location where the Dry Port will be built.

Rail A provision for the construction of 1.5 km railway spur from the Chipata railway station to the proposed site of the dry port has been made in the Chipata-Mchinji railway project.

Electricity and Water Supply Electricity and water supply are already available at the Chipata railway station, however, there will be need to extend the services to the dry port.

3. Missing Elements of Infrastructure or Land To Support a Viable Dry Port

The missing infrastructure elements are access road, electricity and water supply as indicated above.

4. Technical Details On The Chipata-Mchinji Railway Line

Load Capacity The permissible axle load for the Chipata-Mchinji railway line is 16.82 tonnes for locomotives and 15.25 tonnes for the wagons.

Completion Date The expected completion date for construction of Chipata-Mchinji railway is set for the third quarter of 2008.

10 Chipata Station Details Initially the marshalling yard at the station will have five lines, later to be extended to seven.

Operations The mode of operation of rail traffic from Chipata, through Malawi to Nacala Port in Mozambique is still under consideration.

Engineering Maintenance Facilities. Railway maintenance services are also under discussion as part of the operational agreements.

Signalling There will be no signalling as train operations will be by radio train order or paper order.

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