The Malawi government has retained Central East African Railways (CEAR) to rehabilitate the Limbe–Nkaya–Nayuchi railway line at a cost of $135-million.

CEAR signed a 20-year concession with the Malawi government in 1999 to operate the country’s rail infrastructure, following a privatisation process.

Malawi Public Private Partner-ship Commission CEO Jimmy Lipunga says, since the operating environment has changed, rendering the original agreement ineffective, the Malawi government, with support from consultants funded by the European Union and the World Bank, engaged CEAR in negotiations to review the concession. This resulted in new agreements, including the one for the rehabilitation of the Limbe–Nkaya–Nayuchi railway line.

He, however, says the fee remains at 5% of gross revenue. CEAR’s concession has also been extended to 2045 to ensure the company has ample time to finalise the construction and rehabilitation of the major rail stretches covered in the concession.

“Following comprehensive preparations . . . a series of negotiation meetings started in June. “The negotiations were held in the spirit of wanting to develop the rail infrastructure not only within Malawi but also in the region,” says Lipunga.

In 2011, Brazilian mining group Vale acquired a 51% shareholding in Mozambique’s Northern Corridor Development Company, which owns 51% of CEAR.

Vale is also building the $1-billion Kachaso–Nkaya railway line, which cuts through Malawi from the west to east, for the transportation of coal from the Brazilian mining major from the Moatize coalfield to the Port of Nacala.

The Malawi government is reforming the transport sector to encourage more private-sector investment. As part of the reforms in the transport sector, Malawi has privatised the country’s national airline, Air Malawi, in a deal that has seen the formation of a new company, Malawi Airlines. Ethiopian Airlines, which emerged the preferred bidder for Air Malawi, is expected to have a 49% shareholding in the new company, with the Malawi government and local investors holding the rest of the equity.

Ethiopian Airlines has promised to make a substantial investment in the new airline, which will start plying local and regional routes before the end of the year.