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Johannesburg to Maputo N4 Toll Road Case
Maputo would not be competitive with routes from Pretoria to the South African ports of Durban and Richards Bay to the south. The design of such a facility was quickly prepared. It was estimated to cost US$30 million to construct over a three-year period. Private sector investment and operation was contemplated, via a build-operate-transfer (BOT) project. Energy transmission: The one major infrastructure rehabilitation project in which private participation was not contemplated was the construction of two high-voltage electricity lines from Duvha (near Johannesburg) to Maputo. The lines were needed to facilitate industrial and commercial investments on the Mozambique side of the border. Again, this was part of the effort to strengthen the eastern end of the corridor, to help facilitate the east-west flow of goods and services along the road and railway. The project was to be implemented by the Mozambique Transmission Company, a joint venture partnership of South African, Swazi, and Mozambican electricity utilities. The project was expected to involve US$90 million in investment, about half of which was targeted for the South African side of the border. Commercial Investments in the Corridor On May 6, 1996, the presidents of the two countries, Nelson Mandela and Joaquim Chissano, jointly launched the MDC at an “investors’ conference” in Maputo. Over 180 mostly commercial projects, purportedly worth over US$7 billion, were identified for private investment. Most of the projects on the list were not prepared or packaged to any significant degree, but the list did include some large projects already planned or under construction: • The Mozal project, a US$1.4 billion aluminum smelter near Maputo, was already in development when the toll road bidding process began. BHP Billiton in a joint venture with the South African development bank, the Industrial Development Corporation (IDC), was planning to invest US$1.3 billion in a first phase of the project, which also had strong support from Eskom, the South African power utility. Its chances of success were already apparent—Mozal was similar to the Hillside smelter, completed in Richard Bay in 1996 by the same developers using the same technology. Hillside, completed four months early and 21 percent under budget, had already become the world’s largest greenfield aluminum smelter. Mozal has gone on to be a hugely successful investment project. It has gone through several phases of investment and expansion to become anchor of the Maputo Development Corridor and a principal reason for the ongoing viability of the toll road; • The Belulane Industrial Park, a 600 hectare industrial free zone, was being planned in an area adjacent to the Mozal plant—the zone was expected to attract a mix of foreign, regional, and local investors into heavy industry, manufacturing, and hi-tech businesses. • A US$2 billion iron and steel complex in Matola (adjacent to the Maputo port), based on South African ore and Mozambican gas, was also being assessed at this time. Building Integrated Markets within the East African Community http://dx.doi.org/10.1596/978-1-4648-0227-0