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ASSESSMENT of NACALA DEVELOPMENT CORRIDOR November 2018 Final Draft Report

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ASSESSMENT of NACALA DEVELOPMENT CORRIDOR November 2018 Final Draft Report MORGANA WINGARD FOR USAID ASSESSMENT OF NACALA DEVELOPMENT CORRIDOR November 2018 Final Draft Report DISCLAIMER This publication was produced by the SPEED+ Project under Contract No. AID-656-TO-16-00005 at the request of the United States Agency for International Development Mozambique Mission. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government. (DELETE THIS BLANK PAGE AFTER CREATING PDF. IT’S HERE TO MAKE FACING PAGES AND LEFT/RIGHT PAGE NUMBERS SEQUENCE CORRECTLY IN WORD. BE CAREFUL TO NOT DELETE THIS SECTION BREAK EITHER, UNTIL AFTER YOU HAVE GENERATED A FINAL PDF. IT WILL THROW OFF THE LEFT/RIGHT PAGE LAYOUT.) CONTENTS ACRONYMS I EXECUTIVE SUMMARY 1 0.1. INTRODUCTION ......................................................................................................................................... 1 0.2. KEY FINDINGS ............................................................................................................................................... 1 0.3. KEY BOTTLENECKS ..................................................................................................................................... 5 0.4. KEY RECOMMENDATIONS ...................................................................................................................... 6 0.5. ACTION PLANS ............................................................................................................................................ 7 1. INTRODUCTION 1 1.1. BACKGROUND ............................................................................................................................................. 1 1.2. PURPOSE OF STUDY ................................................................................................................................... 1 1.3. STRUCTURE OF REPORT .......................................................................................................................... 1 2. CONTEXT 4 2.1. HISTORICAL OVERVIEW ........................................................................................................................... 4 2.2. STRUCTURE OF RAILROAD & PORT CONCESSIONS ................................................................... 6 2.3. RECENT STRATEGIC INVESTMENTS ..................................................................................................... 9 2.4. NACALA CORRIDOR TRADE VOLUMES ........................................................................................... 14 3. CORRIDOR TRANSPORT LOGISTICS PERFORMANCE 16 3.1. CORRIDOR TRANSPORT INFRASTRUCTURE OVERVIEW ......................................................... 16 3.2. CORRIDOR TRANSPORT AND LOGISTICS PERFORMANCE ASSESSMENT ......................... 22 3.3. NACALA GENERAL FREIGHT RAILWAY CAPACITY ASSESSMENT ......................................... 33 3.4. PORT INFRASTRUCTURE AND STORAGE ....................................................................................... 36 4. VALUE CHAIN AND TRAFFIC FORECAST ANALYSIS 39 4.1. VALUE CHAIN ANALYSIS ........................................................................................................................ 39 4.2. TRAFFIC FORECAST ANALYSIS ............................................................................................................. 63 5. CONCLUSIONS AND RECOMMENDATIONS 73 5.1. BACKGROUND ........................................................................................................................................... 73 5.2. POTENTIAL ECONOMIC IMPACTS ..................................................................................................... 73 5.3. TRANSPORT AND LOGISTICS RECOMMENDATIONS ................................................................ 83 5.4. VALUE CHAIN RECOMMENDATIONS ............................................................................................... 90 6. ACTION PLANS 93 APPENDIX A. TRANSPORT SECTOR INSTITUTIONAL AND POLICY FRAMEWORK 107 APPENDIX B. TYPICAL TRANSPORT LOGISTICS CHAIN 116 ILLUSTRATIONS Tables Table 1: Vale-Mitsui Consortium Integrated Mine-Rail-Port Project Investment ............................................ 10 Table 2: Nacala Corridor Large-Scale Agriculture and Forestry Investments .................................................. 13 Table 3: Nacala Port—Total Volumes, 2007-2016 (000’s Tonnes) ..................................................................... 14 Table 4: Nacala Port—Malawi Transit Cargo, 2007–2016 (000’s tonnes) ........................................................ 14 Table 5: Nacala Port Description ................................................................................................................................ 19 Table 6: FastPath2 Nacala Corridor Time and Cost Summary ............................................................................ 23 Table 8: FastPath2 Nacala: Total Time, Cost, and Reliability Summary ............................................................. 30 Table 9: Summary of Bottlenecks and Recommendations ..................................................................................... 32 Table 10: Forestry Company1 Lichinga – Volumes to Harvest (000’sTonnes) ................................................ 48 Table 11: Forestry Company1 Nampula – Volumes to Harvest (000’sTonnes) .............................................. 48 Table 12: Forestry Company1 – Total Volumes to Harvest (000’sTonnes) ..................................................... 48 Table 13: Mozambique Imports: Poles, Treated and Painted with Preservatives ............................................ 49 Table 14: Fiber Allocation between Poles and Woodchips (000 tonnes).......................................................... 50 Table 15: Global Market Woodchips and South Africa’s Market Share ............................................................. 51 Table 16: South African Woodchip Value Chain: Transport Cost Component .............................................. 52 Table 17: Woodchip Plantation Sizes, Production, Yields by Plant Source ....................................................... 55 Table 18: Investment and Jobs Linked to Woodchip Export Platform* ............................................................. 60 Table 19: Traffic Forecasts for Nacala Corridor (2015–30) (metric tonnes) ................................................... 64 Table 20: Traffic Forecasts for Nacala Corridor by Road and Rail (2015-30) (Metric Tonnes) .................. 64 Table 21: Traffic Forecasts for MOZAMBIQUE on Nacala Corridor (2015–30) ............................................ 65 Table 22: Traffic Forecasts for Malawi on Nacala Corridor (2015–30) (metric tonnes) ............................... 65 Table 23: Traffic Forecasts for Zambia on Nacala Corridor (2015–30) (metric tonnes) .............................. 66 Table 24: Traffic Forecasts for Mozambique Exports (2015–2030) (metric tonnes) ...................................... 67 Table 25: Traffic Forecasts for Mozambique Imports (2015–30) (metric tonnes) .......................................... 68 Table 26: Forecasts for All Mozambique Traffic (2015–30) (metric tonnes) .................................................... 68 Table 27: Traffic Forecasts for Malawi Exports (2015–30) (values in tonnes) .................................................. 69 Table 28: Traffic Forecasts for Malawi Imports (2015–30) (metric tonnes) ..................................................... 70 Table 29: Forecasts for All Mozambique Traffic (2015–30) (metric tonnes) .................................................... 70 Table 30: Malawi and Mozambique–Economic Impacts of Transport Cost Savings, 2020 ............................. 75 Figures Figure 1: Nacala Port Concession and Sub-Contracting Arrangements .............................................................. 6 Figure 2: Evolution of the Nacala Port and Rail Concession (2000–2015) .......................................................... 7 Figure 3: Interlocking Rail and Port Concessions on the Nacala Corridor ......................................................... 8 Figure 4: Modal Split of National and Transit Cargos on Nacala Corridor ....................................................... 15 Figure 5: Map of Nacala and Beira Corridor Catchment Areas ........................................................................... 17 Figure 6: Planned Developments at Nacala Port Being Financed by JICA ......................................................... 18 Figure 7: Mozambican Export Cost by Transport Cost Component–Road ..................................................... 25 Figure 8: Nacala-Lichinga Rail Transport Cost by Type–Imports ........................................................................ 26 Figure 9: Road Costs per Metric Ton (Link and Node) ......................................................................................... 31 Figure 10:: CDN’s Inflatable Warehouse at Nacala Port ....................................................................................... 38 Figure 11: Woodchip Exporters in US$ million (2016) .......................................................................................... 51 Figure 12: Bayfibre/Shincel Mills: Volumes vs. Lead Distances (Tonnes–2008) ................................................ 54 Figure 13: Bayfibre/Shincel
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