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Ministerial statement on financial and economic aspects of the new Kenneth Kaunda International Airport (KKIA)

Last week i stood on the floor of the house to deliver a ministerial statement on the progress made in the construction of the Kenneth Kaunda international airport. The statement was meant to update the house and the nation on the milestones that have been achieved under the project to date.

Mr. Speaker,

Following my statement, i was requested by the house through you, to issue another statement to address financial and economic aspects of the project, and, it is from this premise that i stand here before the house.

As i have informed the house before, government engaged china Jiangxi corporation for international and technical co-operation Zambia limited to design and construct the new airport infrastructure. The contract came into force on 10th march, 2015 while construction began on 21st april 2015.

Mr. Speaker,

China Jiangxi was given the responsibility to produce the layout designs for the airport facilities which include the presidential pavilion, new passenger terminal, commercial complex, airport shopping mall, office park, new warehousing facilities and the rehabilitation and conversion of the existing terminal into a new terminal to cater for domestic flights.

Mr. Speaker,

I felt it was important to highlight the key facilities that will come with the new airport so as to contextualise the total contract sum of 360 million united states dollars for the design and construction of the new airport facilities.  As the house might recall, the funds were provided by the Exim Bank of china through established procedures.

Mr. Speaker,

Because of the huge task at hand, the main contractors sought the services of other contractors to assist in the execution of the work. The sub contractors on the project are the following:

  • Lusaka water and sewerage company limited;
  • Zulu development consultants limited;
  • Zambia electricity supply corporation (Zesco);
  • Asphalt roads zambia limited
  • Zambia telecommunications limited (Zamtel);
  • Department of water affairs;
  • Gauff Ingenieure;
  • Redland technologies limited;
  • Davis & Shirtliff Limited;
  • Electrotec engineering limited;
  • China adb;
  • Hunan Zhongda designing institute company limited;
  • Hangzhou Jinhui steel structure test project company limited;
  • China airport construction group corporation of CACC; and
  • Nei investments limited;

Mr. Speaker,

Out of the total loan amount of 360 million united states dollars, over 250 million united states dollars (including 108 united states dollars which is advance payment) has been spent on various project items. Amounts disbursed to each of the major sub contractors are follows:

  • Uu$99,659.09 to Zesco;
  • Us$13,228.43 to Zamtel; and
  • Us$267,853.27 to nNi investments ltd.

 Mr. Speaker,

With regard to the terms of the loan, i wish to inform the house that the maturity period for the loan facility is 240 months or 20 years with a grace period of 84 months or 7 years while the loan is expected to be repaid within a period of 13 years. Further, the applicable interest rate on the loan is two percent (2%) per annum while the rate applicable for the management fee is 0.25%. Lastly, the rate applicable for the commitment fee is also 0.25% per annum.

Mr. Speaker,

As we progress in the construction of the various facilities under the airport, Zambia airports corporation limited will contract the services of third party private entities to manage and operate facilities such as kitchens, hotels and other commercial spaces.

We are glad that this project is one among many that is contributing and will continue to contribute to employment creation during and after construction.  As of end of January 2018, the total number of Zambian employees on the project was 1,185. After construction, similar levels of full time employment will be created to support the operations of the many facilities i have mentioned. As evidenced by experiences in other airports in the region, this important national asset will be a hive of economic activity.

Therefore, in addition to the direct and indirect jobs to be created across the supply chain, the following are the anticipated benefits that will accrue to our economy once construction is completed:

  • increased revenue and commercial viability of the Zambia airports corporation ltd with brighter prospects for growth;
  • Contribution to human resource capacity development through learning by participation of the many of our young Zambians involved in the construction process;
  • Raising the profile of our aviation sector and airport standards;
  • Promoting Zambia as a tourist destination and the growth of local tourism enterprises through increased international and domestic tourist arrivals; and
  • contribution to the viability and prospects of the soon to be introduced national airline.

As i conclude this address, i wish to state that this project is of significant importance to the Zambian economy in many respects. This is because the economic, commercial and social benefits far outweigh the cost of investing in the project. It is one of the projects that is poised to provide impetus towards industrialisation and transformation of zambia into a transport hub in the region and beyond. I must also mention that this is one of the legacy projects which makes government and many of our citizens, proud.

As a ministry, we will continue to provide feedback on the project as well as others we are implementing as part of our obligation to be accountable to our people.

 

Mr. Speaker, i thank you.

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