Ministry of Transport and Public Works has granted local firm African Rail Corporation (ARC) Malawi Limited a licence to provide railway transport services on the Nacala-Blantyre route.
A letter from the ministry seen by Business News said government granted the approval following internal consultations and inspection of the ARC’s railway locomotives and rolling stock before the company begins its operations in Malawi.
Reacting to the development, ARC Malawi managing director Davies Lanjesi said once fully operational, the rail transport offered by his company will reduce the cost of transporting essential goods such as fertiliser and fuel from Mozambique to Malawi.
He said: “This is a very positive development for the people of Malawi. When businesses cut the cost of transport, countries become more productive. In our case, we will capitalise on the economies of scale. One train can bring in 1.2 million litres of diesel.
“In the end, businesses will make more profits. Products become cheaper for consumers and the country collects more taxes.”
Lanjesi said his company will now negotiate with Nacala Logistics, formerly Central East African Railways, the concessionaire of the Nacala to Limbe railway line, before the company rolls out full operations.
A concessionaire is a business that has been granted the right to sell something on property owned by another entity. In this case, Nacala Logistics has the rights to the Nacala to Limbe port and ARC will have to sign an agreement with them before they can use the railway line.
The development coincides with the signing of trilateral agreements between the governments of Malawi, Mozambique and Zambia to improve the infrastructure along the Nacala Development Corridor and to collaborate on rail and road transport from port to inland cities.
In an interview on the sidelines of the inauguration of the rehabilitated and modernisedNacala Port, Minister of Transport and Public Works Jacob Hara said using the rail line from Nacala to Blantyre will cut the cost of transport by about 30 percent.