ZAMBIA has in the recent past experienced some of the worst accidents that have resulted in the loss of lives on public roads. In 2016, over 2,200 people died as a result of road traffic accidents on our public roads.
Statistics show that most of these accidents were a result of human error related factors arising from the fact that the Road Transport and Safety Agency (RTSA) has over the years faced numerous challenges in preventing such crashes due to lack of adequate state of the art equipment to render services to the public as expected. Additionally, on a number of occasions, motorists have spent long hours in queues in pursuit of services from RSTA.
In line with Government’s vision of a Smart Zambia to leverage on the use of information communication technologies (ICTs) in providing services recently, Government through the Road Transport and Safety Agency entered into a Concession Agreement with Intelligent Mobility Solutions Limited a Consortium Lamise Trading and Kapsch International a Company from Austria for the development and implementation of a road Safety Management System.
However, there have been some questions surrounding this project that is earmarked to reduce road traffic accidents, provide for a sustainable road transport system, and spar economic development. Some questions have been raised such as; has Government given the functions of the RTSA to this company? The answer is no. RTSA will maintain its core functions.
Therefore, this week, the article highlights some of the questions and answers concerning this project:
1. Was the due procedure followed?
RTSA, on January 23, 2017 received an unsolicited proposal for radio frequency identification (RFID) plates, car fitness and radar solutions through a Public Private Partnership (PPP) model by Lamise Trading Limited.
In light of the said proposal, the Agency on January 30, 2017 received a directive from the Permanent Secretary at State House to undertake a preliminary evaluation of the received unsolicited proposal. In line with Section 42 of the Public Private Partnership Act of 2009, the preliminary evaluation was conducted.
Following submissions of the preliminary evaluation to the PPP Unit, the Agency was on March 9, 2017 directed by the Unit to subject the unsolicited proposal to competition by requesting for competing proposals in accordance with Section 42 (6) of the PPP Act. The agency proceeded to request for competing proposals through advertisements in the public media. The request for competing proposals closed on April 12, 2017. Four (4) competing proposals were from MTM Traffics of South Africa, Grand View International a joint venture between Zambian/Romanian firms, Fischer Consulting of South Africa and Rashmita Information Systems of India.
The agency, between April 25-27, 2017 evaluated the competing proposals. The best of the competing proposals was compared with the unsolicited proposal as guided by the PPP Act. The Evaluation Committee’s submission to the PPP Unit recommended that Lamise Trading Limited be allocated the preferred bidder status.
The PPP Unit on May 23, 2017 informed the Agency that PPP Council had approved the preliminary award of a concession agreement between the RTSA and Lamise Trading for the financing, development, operation and transfer of a road safety management system.
The Agency proceeded to oblige with the directives of the PPP Council. A due diligence on the preferred bidder and its associates was undertaken by a combined team of the Road Development Agency (RDA), National Road Fund Agency (NRFA) and RTSA between June 19, 2017 and July 1, 2017. The due diligence was conducted in South Africa, Germany, Spain, Poland and Austria. Pre-contract negotiations with the Concessionaire were conducted in July, 2017.
On August 18, 2017, the PPP Council approved the request to enter into a Concession with Lamise Trading Limited in partnership with Kapsch for the installation, operation and transfer of a road safety management system.
The Concession Agreement for the system was cleared by the office of the Attorney General on August 21, 2017 and the Concession Agreement was signed on August 23, 2017.
2. Why Lamise?
Lamise Trading Limited is the firm that submitted the unsolicited proposal. The unsolicited proposal was subjected to competition which received 4 competing proposals. The best of the four proposals was compared with the Lamise Trading proposal, and the Lamise proposal was evaluated to be better than the competing proposals. Lamise Trading Limited did not have to resubmit their proposal.
3. Why 17 Years of the PPP?
The discounted cash flows payback period is year 8 at 15% cost of capital.
The project shall break even in the 8th year. The other 7 years shall be for having a return on the concessionaire’s investment. The initial two years are for setting up. The common practice for many concession agreements is 20 years. The company will be given time to recover the money, after which the RTSA will fully take control of the project.
4. What are the Concessionaire Obligations?
The Concessionaire shall be responsible for the cost of building and establishing, operating and maintaining the project, including:
a. supplying, constructing and commissioning the project facilities;
b. the operation and maintenance of the project facilities including routine and major maintenance;
c. the collection of the user charges;
d. the cost of salaries and other compensation to employees engaged in the project, including any liability to such employees on divestment;
e. the cost of materials, supplies, utilities and other services pertaining thereto;
f. insurance premiums for which the Concessionaire is liable under clause 15 below; and
g. all taxes, duties, fees and other imposts lawfully imposed on the Concessionaire or its contractors and sub-contractors in carrying out the project, in accordance with the remaining provisions of this Agreement.
5. How the Concession Agreement affect the RTSA mandate?
The Concession Agreement will not affect the RTSA mandate. RTSA shall continue with its mandate. What the project shall bring are mechanised testing and other modern tools in road safety management.
The RTSA shall continue to licence drivers and motor vehicles, issue Road Service Licences to Public Service operators, and register motor vehicles.
The Concessionaire shall build 30 motor vehicle inspection centres with mechanised vehicle testing equipment. It should however be noted that the RTSA is not being sold.
6. What are the benefits of the PPP?
The project is earmarked to reduce road traffic accidents, provide for a sustainable road transport system, and spar economic development through establishing the Traffic Management Control Centre, Road Safety Law Enforcement equipment, Vehicle inspection centres and Electronic Vehicle Registration with Secure number plate
7. Why re-registration?
To enhance electronic motor vehicle registration with secure number plates and Radio Frequency Identifier (RFID).The following are the expected benefits.
i) Improved security for vehicles as they can easily be traced and identified;
ii) There will be no check points as all motor vehicles will be electronically checked for compliance;
iii) There will be electronic payment of fines, road tax and other services.
iv) There will be improved service delivery at tolling points as vehicles will be recognized electronically to facilitate quick passage;
v) Improved compliance with the requirements of Road Traffic Act in terms of motor vehicle fitness and motor vehicle licensing as this will be checked electronically;
vi) The safety of the public will be enhanced as all Public Service Vehicles will be electronically monitored; and
vii) This will empower the public to easily correct and update their vehicle details.
8. Why K500.00 from the current K970.00 for re- registration?
The breakdown of the fee as follows:
• Duplicate Certificate fees – K216.90
• Change of Registration – K58.50
• Two physical number plates – K150
• Third number plate – Radio Frequency Identification (RFID) –K200
9. Why K130 for inspection fees for small cars and K260 for heavy vehicles
The inspection of these vehicles shall be fully mechanised and to facilitate participation of private sector a commercially viable fee needs to be charged. The average fee in the region is approximately K300.
10. How much is expected to be raised every year and Responsibility of the Secretary of Treasury regarding revenue raised within Zambia
An Average of US$50 Million a year. The project does not involve any disposal of state assets. All revenues collected under the concession agreement will be deposited into the Escrow Agreement to be opened with the Bank of Zambia.
The Agency has sought authority from the Secretary to the Treasury to open the Escrow account.
The project will be implemented as a Build Operate and Transfer, at the end of the concession term, all the assets under the project will vest in the state.
Therefore, this PPP arrangement provides a winning formula for development.
Thus the benefits that this project brings to the Zambia are enormous in as far reducing road traffic accidents, provide for a sustainable road transport system, and economic development.
It is therefore only prudent to bring on board the private sector in providing some services such as the Advanced Road Safety Management Solution and Services through Public Private Partnerships (PPPs) and reduce pressure on Government fiscal space.
The author is Head – Public Relations
Road Transport and Safety Agency