A Railway Concessioning Toolkit

Sub-Saharan Africa Transport Policy Program The World Bank and Economic Commission for Africa SSATP Working Paper No. 74 A Railway Concessioning Toolkit Application to African Networks Africa Region April 2003 World Bank Working Paper SSATP No. 74 A Railway Concessioning Toolkit Application to African networks The Sub-Saharan Africa Transport Policy Program (SSATP) is an international partnership to facilitate policy development and implementation and related capacity building in the transport sector in Sub-Saharan Africa. Sound policies lead to safe, reliable, and cost-effective transport, giving the poor access to markets and services, and helping countries to compete interna- tionally. The findings, interpretations, and conclusions expressed here are those of the author and do not necessarily reflect the views of the World Bank, UNECA or any of their affiliated institutions. Photo Credit: Eric Maunoir - ISTED PREFACE A number of rail networks in Sub-Saharan Africa have been experiencing genuine revitaliza- tion in recent years. Traffic is once again on a growth path after a decade of decline, and a por- tion of the traffic volume that had been lost to road transport is returning to the railways. The customer base recognizes the improvement in quality of the service provided and notes that these railway systems have ceased to be government administrations and are becoming commercial enterprises. Generally speaking, these railway systems have been improved and modernized; they employ fewer people but who are better trained and highly motivated; infrastructure has been rehabilitated and is well maintained; and rolling stock is available and reliable. This performance has been reflected in profits for rail operators, freeing governments from the heavy burden of subsidies traditionally disbursed to the railway sector. These “new railways,” which in Côte d’Ivoire and Burkina Faso, Cameroon, Madagascar, Senegal, Mali, Zambia, or Malawi have been replacing the public railway enterprises of the 1980s, are oper- ated under concession arrangements. The successes achieved have already prompted a number of other countries to follow this example, and new railway concessions will become operational shortly, in particular in Mozambique (Ressano-Garcia and Nacala lines), or are currently in preparation, as in Congo-Brazzaville, Benin, Niger, Kenya, Tanzania, Uganda, Mozambique (the Beira railway), and the Tanzania-Zambia railway. The rail component of the SSATP has played a major role in this “rail revolution” in Africa. In 1997, it organized a seminar in Abidjan, where the initial experiences with concession arrangements were presented and discussed. The World Bank and the French development agency (Agence française de développement), whose representatives are providing the lead in this area in liaison with the senior officials of the Union of African Railways (UAR), provide critical support to the governments embarking on the concessioning process, advising them on the rules of the game to adopt for the concession and on the procedures for selecting the con- cessionaire. These donors also often play an essential role in mobilizing the financing necessary to facilitate the concessions. The Toolkit presented here (also available in French as the Guide de mise en concession ferroviaire) is intended to provide African countries, in summary form, with an overview of the experience to date with railway concessioning in Sub-Saharan Africa. The reader will note that the Guide refrains from defining “the” model concession arrangement to be applied in every circumstance; no such model exists, and each individual situation calls for individualized solutions. But the wealth of accumulated experience should at least make it possible to avoid repetition of some of the mistakes that the pioneers with concession operations did indeed make in the course of the process, the complexity of which could hardly be underestimated. Finally, the publication of this Toolkit provides us an opportunity to pay homage to a number of these pioneers in railway concession arrangements in sub-Saharan Africa, in particular Lou Thompson, , Karim-Jacques Budin, and Yash Pal Kedia, all now retired from the World Bank, and Olivier Ratheau of the Agence française de développement. We also wish to extend our thanks to Jean-Marie Gugenheim, who, on behalf of the BIPE consulting firm, was responsible for putting this Toolkit in final form. Marc Juhel Transportation and Logistics Advisor The World Bank iv TABLE OF CONTENTS 1. Introduction .........................................................................................................................1 1.1. Purpose and Content of the Report........................................................................................1 1.2. Specific characteristics of concessions discussed in this Toolkit as distinct from other arrangements.................................................................................................................2 2. Context..................................................................................................................................8 2.1 Status of concessioning operations........................................................................................9 2.2. Lessons learned....................................................................................................................14 3. Tasks to be performed.......................................................................................................23 3.1. Summary of concessioning process.....................................................................................25 3.2. The concessioning process ..................................................................................................26 4. Standard agreement ..........................................................................................................35 4.1. Definition.............................................................................................................................37 4.2. Title 1: General Information................................................................................................37 4.3. Title 2: The Railway Network Concessioned......................................................................39 4.4. Title 3: Railway Infrastructure.............................................................................................41 4.5. Title 4: Commercial Rail Services.......................................................................................41 4.6. Title 5: Public Service Obligations......................................................................................42 4.7. Title 6: Use of the Network by Third Parties.......................................................................43 4.8. Title 7: Railway Equipment.................................................................................................44 4.9. Title 8: Concession Fee .......................................................................................................44 4.10. Title 10: Duration of the Agreement....................................................................................44 4.11. Title 11: Disputes and Litigation .........................................................................................46 4.12. Title 12: Monitoring of the Agreement................................................................................46 5. Selection Procedures..........................................................................................................49 5.1. Major stages in the selection procedure...............................................................................51 5.2. Independence of technical and financial proposals .............................................................52 6. Annexes: Standards Documents.......................................................................................57 6.1. Terms of reference for the selection of the consultant.........................................................59 6.2. Text of call for expressions of interest.................................................................................73 6.3. Text of confidentiality agreement........................................................................................77 6.4. Text of undertaking on ethics and transparency ..................................................................83 6.5. Text of undertaking on avoiding corruption........................................................................87 6.6. Bid security text...................................................................................................................93 6.7. Contents of pre-qualification documents.............................................................................97 6.8. Contents of selection materials..........................................................................................101 6.9. Promoters’ commitment letter regarding capital ...............................................................105 6.10. Standard concession agreement.........................................................................................109 1. INTRODUCTION INTRODUCTION 1.1. Purpose and Content of the Report 1.1.1. Aim of the Toolkit The aim of the guide is to describe the method and all the instruments of value for concessioning a railway. 1.1.2. Contents of the Toolkit The Toolkit comprises the following six parts: (1) Characterics of the railway

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