Post on 18-Dec-2015
© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Juliet Reingold
19 July 2013
AFRICA G20 INFRASTRUCTURE INVESTMENT CONFERENCE
Transport and Logistics Infrastructure
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Introduction
Efficient transport and logistics channels are key for commodity-based economies to grow
Logistics are a very significant part of the overall cost
Often can be a bottleneck that caps investment returns and revenues
Multi-stakeholder environments add to complexity
Expectation is for a growth in demand and changes to the current transport environment
This will require:
– coordinated regional approach
– shared regional transport infrastructure
– Governments need to encourage private-sector/PPP engagement for greenfield transport logistics infrastructure
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
RAIL MAP OF AFRICA
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Railway concessions awarded in Africa from 1990 to 2009
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Current Railway Transport Landscape
47 railways in 32 African countries
Railway concessions since 1990
Some specialist mineral lines – West and Southern Africa
Total network size:
– 70,000 km
– 55,000 km in operation
– single track and little electrification
Railway standards are from when railways were built over 100 years ago:
– low axle loads and low speeds
– under capitalised
– ill suited to modern requirements
– limited upgrading
– track deterioration
– signalling systems rely on manual networks
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Current African Institutional Railways Structure
Trend is to unbundle core infrastructure from transport services
– Uganda, Kenya, Ghana (SOE)
– Zambia/Tanzania (privately operated until recent concession cancellations)
Vertical integration models involving SOE’s:
– South Africa (TRANSNET)
– Botswana
– Nigeria
– Namibia
No independent railway regulatory authority
Self regulation by SOE Railway Company or Ministry
Except Tanzania – multi-sector regulator for rail, roads, ports - SUMMATRA
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Current Constraints
Big volumes, big distances
No transcontinental motorway system
Road tariffs are high
Transport interchanges are complex and create blockages
15 land-locked countries
Burdensome trade regulations
Customs agencies – viewed as logistics unfriendly
Railway:
– transit times are slow
– services are infrequent
– absence of reliable cross-border interconnection services
– track infrastructure
– freight car imbalance
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
TRANS-AFRICAN HIGHWAY AND MAJOR PORTS
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Source: Transport Prices and Cost, AICD 2008
ROAD FREIGHT PRICES IN AFRICA
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Current Constraints
Big volumes, big distances
No transcontinental motorway system
Road tariffs are high
Transport interchanges are complex and create blockages
15 land-locked countries
Burdensome trade regulations
Customs agencies – viewed as logistics unfriendly
Railway:
– transit times are slow
– services are infrequent
– absence of reliable cross-border interconnection services
– track infrastructure
– freight car imbalance
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Key Structural Legal Issues
Clear legislation and enforcement of law
Regional harmonisation of laws
Legal framework for PPP’s
Dispute resolution through international arbitration
Transparency and accountability
Physical and contractual inter-dependencies between host countries
Robust and legally binding concession contracts
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Multi-stakeholder environment
Rail operator
Mine 2
Mine 1
Mine 3
Factory
Power station
Pipeline operator
Stakeholders
• Mines: One or several mines, competing mining houses, different commodities
• Rail operator: Multiple freight customers, sometimes passenger traffic
• Port operator / end customer: Export terminal or end customer
• Utilities provider: Power and water supply for mining operations
• Country interests: One or more countries with economic interests, regulations and political debates
Potential ownership structures: Single private owner, JV, state owned, or PPP
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Multi-stakeholder: commercial models
Historic ownership model Rail and ports Government-owned
Increasing complexity, rapid Substantial deficiencies within mineral
industry expansion, emergence transport supply chain / competing and
of new stakeholders complimentary interests
Solutions beyond Government Private ownership / PPP
funding essential
Use existing infrastructure State owned / commercially-owned / concession
Private ownership Mining company preference for vertical integration?
Competition issues for smaller miners / third party access
Significant costs of dedicated infrastructure
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
Key Contractual PPP Issues in Transport Projects Location – minor boundary adjustments create difficulties
Securing tenure – slow, subject to legal challenge, gaps in tenure
Access Regime:– who controls access to the track?– is there shared use?– capacity allocation– management of incidents and responsibility for delays and incidents– access charges/pricing mechanisms
Safety, environment
Co-use arrangements
Crossing other infrastructure:– corridor not to become barrier to adjacent development– unfettered rights to cross not unwittingly granted– highly-regulated environment – risks of compensation imposed– continued existence of agricultural communities
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© Simmons & Simmons LLP 2011. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities.
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