VZCZCXRO5366
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLU #1015/01 2761255
ZNR UUUUU ZZH
R 031255Z OCT 07
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 4352
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHBJ/AMEMBASSY BEIJING 0103
RUEHHK/AMCONSUL HONG KONG 0006

UNCLAS SECTION 01 OF 02 LUANDA 001015 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR AF/S AND EAP/CM 
DEPT PASS USTDA 
 
E.O. 12958: N/A 
TAGS: ETRD EINV AO CH
SUBJECT: ANGOLA -- BENGUELA RAILROAD CONSTRUCTION IN 
ABEYANCE 
 
REF: LUANDA 648 
 
¶1.  (SBU)  Summary: The Benguela Railway is one of three 
strategic railroads linking Angola with its neighbors to the 
north and south.  Although the China International Fund (CIF) 
won a contract to the restore the Benguela line in January 
2006, the company has yet to lay down rails.  The Chinese 
director of the CIF's prime subcontractor reports his company 
has not been paid by the CIF, and that restoration of the 
Benguela line will not move forward until the CIF's 
(unspecified) financial problems are resolved. End Summary. 
 
CFB Tries Bootstrapping 
----------------------- 
 
¶2.  (SBU)  On 24 September 2007, Econoff and visiting 
political and economic officers met with Gil Vaz de Carvalho, 
the Financial Manager of the Benguela Railway (CFB).  When 
operational, the Benguela railway connects Southern Africa to 
the Democratic Republic of Congo and Zambia.  The railroad 
has been inoperable since Angola's 1974-2002 civil war. 
Since late 2005, according to the CFB, the railway has 
operated on 221 kilometers of restored track in three 
isolated sections, providing passenger service in the 
Benguela-Lobito area, around the city of Huambo, and around 
Kuito, Bie Province.  The CFB itself laid the rails, 
contracting out the work of building bridges and grading some 
sections of right-of-way.  Passenger service does not earn 
enough to cover operating costs, however, so the CFB 
currently depends on GRA subsidies to continue operating, 
said Vaz de Carvalho. 
 
¶3.  (SBU) In January 2006, Angola's Office of National 
Reconstruction GRN awarded the contract for restoration of 
the Benguela Line to the China International Fund.  The CIF 
subcontracted the restoration to various Chinese construction 
companies, principally the 20th Railway Construction Brigade 
(RCB).  The work, including laying the rails, building new 
stations, and installing all signaling, was originally to 
have been completed by August 2007, according to the 
contract.  Over the last 21 months, according to the CFB, the 
20th RCB has constructed nine work camps, bulldozed rough 
access roads, established a gravel quarry and positioned 
equipment, but has not laid a single rail.  (Note:  The next 
day, the director of operations for the 20th RCB, a Mr. Niu, 
informally acknowledged to Econoff that work could not begin 
because the CIF "has no money" to pay for the work currently 
being done). According to the CFB, even if the 20th RCB began 
laying rails, a 400-kilometer section of the railroad between 
Camacupa and Luena has not yet been demined by the Angolan 
Armed Forces (FAA). 
 
Press Reports to the Contrary 
----------------------------- 
 
¶4. (SBU) On September 15, Angola's Government-owned daily, 
the Jornal de Angola, reported that work on Angola's three 
railway lines was already 75 percent complete, quoting data 
from the Ministry of Public Works.  The article avoids 
mentioning track laying on the Benguela line, instead listing 
the construction of access roads, a factory to produce 
ballast (gravel) and a production plant for concrete railway 
ties.  The report also mentions the FAA is clearing mines 
from the 400 kms. of affected throughway.  Vaz de Carvalho 
said he had read the article and was puzzled by the report, 
especially, he added, because the Ministry of Public Works 
has no responsibility for the Benguela project. 
 
Eager Mine Owners in the Congo 
------------------------------ 
 
¶5.  (SBU)  Mine Operators in the Congo and Zambia are eager 
to have an alternative route to export minerals.  Their ore 
takes three weeks to reach Durban by rail, explained Vaz de 
Carvalho.  When they try sending the ore by truck with armed 
escorts, he continued, bandits attack the convoys, the 
drivers and cargo vanish, while the trucks or their trailers 
may be identified months later in Mocambique or Tanzania. 
 
Comment 
------- 
 
¶6.  (SBU)  The work stoppage on the Benguela line parallels 
prior reporting on problems facing restoration of the Malange 
RR line (reftel).  Niu's explanation supports some rumors 
among the Chinese in Luanda that the GRA's loose management 
 
LUANDA 00001015  002 OF 002 
 
 
of oil credits and its opaque relationship with the CIF may 
be key factors in the delayed roll out of politically 
important social and economic development projects. 
FERNANDEZ