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Wednesday, 5 October 2011

Dissolved!

The Road Development Agency (RDA) has become the sixth organisation to have its board terminated by the President for wide corruption in the awarding of contracts. The President has also blocked a payment of K4 billion to fake company managing scanners at Nakonde border post, which belonged "to someone who occupied his office".

6 comments:

  1. " which belonged to someone who occupied his office." :))

    If they keep digging long enough, they will find enough material to fend off any legal claim for breaching the Development Agreements.

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  2. It seems as good a time as any to go on record again to back the German standard on road building (what can I say, when it comes to engineering, it often pays to take cues from Germans and Japanese, though not exclusively by any means). The basic concept is to take free market bids for a given road contract, but to get really specific about what level of quality the road must be, over and at certain benchmarks in its lifetime. The company that signs the contract must guarantee both the initial installation and maintenance of the stretch of road in question. They must either obtain sufficient insurance to be able to reliable fulfill such a guarantee, or self-insure via secured bond or other capital reserve or secured credit instrument.

    Granted that in the case of domestic companies that do not have ready access to such capital, credit, or insurance instruments, these sorts of requirements would price them out of the marketplace, to the detriment of industry development. Therefore they should be engaged either (1) on smaller scale projects where a lesser degree of security can be reasonably accepted due to decreased cost of remediation and/or economic impact in the event of failure to maintain the transport link for an extended period; or (2) as partners with international corporations and grant initiatives where the partner is capable of bearing the brunt of insurance requirements and where technology transfer to domestic companies can be maximized.

    This is not a tenable position for Zambian construction companies over the long term, and therefore an enabling environment must be created whereby they can avail themselves of better engineering and equipment, leading to better reliability and profitability, leading to better insurance and credit ratings, leading to faster growth, more employment, higher wages and a greater share of the road building and maintenance role both domestically and regionally.

    Zambian government is too poor to pay for the same road twice. It needs to pay a little more up front and lock the contractor in to making sure the road holds up to the actual load. It is fair to allow additional insurance to cover acts of God not anticipated in the original contract, or to require the maintenance requirement to be lessened if traffic exceeds predictions by extreme amounts. Other than reasonable, engineering based explanations however, the contractor should be able to keep the road working for the length of the contract, end of story.

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  3. QUOTE: ''It seems as good a time as any to go on record again to back the German standard on road building (what can I say, when it comes to engineering, it often pays to take cues from Germans and Japanese, though not exclusively by any means). The basic concept is to take free market bids for a given road contract, but to get really specific about what level of quality the road must be, over and at certain benchmarks in its lifetime. The company that signs the contract must guarantee both the initial installation and maintenance of the stretch of road in question. They must either obtain sufficient insurance to be able to reliable fulfill such a guarantee, or self-insure via secured bond or other capital reserve or secured credit instrument.''

    WHERE DO SUCH BRILLIANT IDEAS/SUGGESTIONS END UP? I AM CURIOUS TO KNOW...

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  4. Anonymous,

    Please excuse my confusion as I am not certain that I fully understand the specific thrust of your question. I will try to be as comprehensive in my answer as I am able.

    To begin I will confirm that my statements are intended as a presentation of ideas (usually not strictly my own, but rather gleaned from my assessment of global best practices as presented by third parties), and couched as suggestions as specific to the Zambian context as I personally feel possible given my advisory role. As to whether or not they are "brilliant" in either the accepted british or american usages of the term, in both cases that tends to be in the eye of the beholder, but I thank you for what my ego hopes was a compliment. I will however give proper credit to the engineers and material scientists who have spent decades applying their talents to optimizing road durability, and to the visionaries who designed the original regulatory environment that made durability the defining competitive criteria alongside cost in an otherwise unfettered free market competition between road-building contractors.

    I am a "small-d democrat", which means that for me the place where such ideas "end up" is in the minds of the electorate (even if only to be immediately dismissed as unworkable), and I venture to say that the Zambian electorate will never really be done making decisions about collective investment in transportation. As to where this particular suggestion may travel, well, that depends on how many other people think that it is a good suggestion, and are willing to help carry it through the necessary stages towards practical implementation in the Zambian context.

    I recall that prior to the Zamtel sale now once again under judicial review, thoughts and proposals gathered from contributors here were presented to government along with an open offer of continued engagement to help restructure and preserve the taxpayer's investment in the company. Needless to say we were politely rebuffed and then got to stand on the sidelines and try to point out the potential problems with RP Capital and the nature of the contracting as it happened. That is an issue that has been repeatedly debated here since 2007 as developments have unfolded, and we have yet to see the end of it so far. I will refrain from further comment on the matter now that it is once again under official review.

    Roads are another perennial issue, and there are arguments to be made for many standards and priorities. Personally, I am tired of seeing the same high use roads and bridges come up for tender every few years, instead of every few decades, and the rest of the road network languishing as a result. I am encouraged by recent talk of reinvestment in rail to take pressure off of the main road arteries. I would also like to see tenders which place emphasis on durability and accountability, and perhaps that is where the suggestion ends. We shall see what a reconstituted RDA and new ministerial leadership decides once they have reviewed all the facts and arguments.

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  5. Unnamed sources are being quoted in the Post giving detailed numbers on recent roadwork contracts and alleging massive under-reporting of costs to taxpayers by RDA:
    http://postzambia.com/post-read_article.php?articleId=23384

    Meanwhile Reuters are reporting that:

    Zambia will scrap a levy on fuel used to fund strategic reserves, which will now be the sole responsibility of the government, Energy Minister Christopher Yaluma said on today.

    “The onus of holding fuel will go into the hands of government. The government will take that risk and will ensure that we do not have shortages. Right now the government has ensured that storage facilities are built across the country,” Yaluma told a media briefing.

    He said as a result, the price of petrol would drop to K 8,155 Zambian per litre from K 8,647 a litre while that for diesel would be reduced to K7,566 per litre with effect from midnight.

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  6. Good editorial on developers, drainage and dust by Nellow Simukonde, from Lusaka Times: http://www.lusakatimes.com/2011/10/11/smallscale-developmentsour-mud-dust-zambia/

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