A proposed Swaziland rail freight project is still being discussed three years after I was first asked to examine it at a USTSA conference in South Africa.
Proponents are holding another conference about it. But the required economic feasibility assessment report needed to get investors to write checks to fund it — is still missing.
In a news report today that you can read at — http://www.observer.org.sz/business/73142-multi-billion-rail-link-under-spotlight-at-sara-conference.html — many will gather to hear papers delivered. “Multi-billion rail link under spotlight at SARA conference” The news report is by Nomthandazo Nkambule
The proposed multi-billion rail line will be discussed during the Southern African Railways Association (SARA) in South Africa. The line is championed by Swaziland Railway and Transnet Freight Rail. They would operate the rail service.
Funding still remains uncertain.
A detailed market assessment of how much traffic would use the proposed new route and an economic projection of the traffic’s ability to cover all of the operating and capital costs of the investment is “still missing”.
Until this due diligence assessment is available, investors will not write a check.
The due diligence has to assess customer commitment to use the project as the iron ore and coal resource super cycle appears to be declining according to multiple Independant experts.
If no customers (commodity buyers rather than sellers) show up for the conference and speak out, that would be a bad sign for the rail investors. The railway capital project loan has to be paid back from rail earnings from the traffic bought by the commodity buying customers.
A conference like this may not be worth attending if the ultimate customers of the proposed rail project are not attending.
I have seen too many rail projects were everyone except the paying customer (user) is interviewed and listen to as to her or his requirements. In the profitable North American rail business model, everything about a capital plan revolves around the using customer.
Sent from Jim Blaze’s iPad