CABINET’s shock decision this week to cancel the US$400
million National Railways of Zimbabwe (NRZ) recapitalisation deal won by the
Diaspora Infrastructure Development Group (DIDG) and South African rail, ports
and pipeline utility, Transnet, has sharply divided government and sucked in
the military, as the battle to control one of Zimbabwe’s largest parastatals
intensifies.
Informed multiple sources said the resolution, which
follows unrelenting lobbying, cajoling and threats by Transport minister Joel
Biggie Matiza has angered a number of ministers, government bureaucrats and
security bosses who have been involved in the project since 2017.
The fight over the deal pits rival groups of officials led
by Foreign Affairs and International Trade minister Sibusiso Moyo and Matiza.
Senior security service chiefs — from the military and intelligence — had
vetted and endorsed the deal. Zimbabwe Defence Forces’ Major-General William
ube has been sucked into the issue as NRZ deputy chair.
Advocate Martin Dinha is the chair.Sources said most ministers have joined
forces with the NRZ management and board, bureaucrats and security bosses to
fight back.
This comes as sources also warned that a massive legal
battle could be looming over the project. Matiza and his forces are also
digging in, sources said.
Even though some ministers did not speak in cabinet on
Tuesday, sources said, they left fuming as they have put sustained efforts to
ensure the project — which is critical for economic recovery — is implemented.
President Emmerson Mnangagwa had been supporting the deal
until cabinet’s shock decision on Tuesday. Mnangagwa officially commissioned
the project in Bulawayo last year.
However, in a dramatic resolution on Tuesday cabinet
terminated the multi-million dollar deal.The cancellation of the deal came
after Mnangagwa highlighted during his state-of-the-nation address and the
official opening of the 2nd session of the 9th parliament on October 1 that the
money required for the project has been secured through DIDG.
Announcing the termination of the deal, recently approved
by the NRZ board and now being assessed by Treasury, Information ministry
permanent secretary Nick Mangwana said parties to the transaction had failed to
conclude ongoing negotiations within the stipulated timeline, prompting
government to re-tender the project.
As repeatedly reported by the Zimbabwe Independent in its exclusive
series on the protracted transaction, Matiza had been making calculated
manoeuvres and a spirited bid to derail the project to bring in via the back
door a Dubai-based entity, Feonirich Investments LLC, which had failed to meet
the tender process deadline.
After failing to persuade the Dinha-led NRZ board to muscle
out DIDG from the deal, Matiza — following a series of meetings involving
Mnangagwa and other parties involved last week — then turned to cabinet where
he presented a damning report focussing on the Transnet-DIDG internal dynamics,
technical partner matter, framework agreement issues, timeframes and funding
availability.
Sources said Matiza urged cabinet to cancel the deal on the
basis of these issues. DIDG and NRZ, among other parties, were not given a
chance to respond to Matiza’s report.
“In his report, the minister told cabinet that the deal had
virtually collapsed mainly because of the fallout between DIDG and Transnet; he
also claimed that the consortium had failed to raise the required funds,” a
source said.
“Matiza also reported that Transnet undertook due diligence
on DIDG and found no evidence of it being in a position to raise the required
equity capital. Matiza further claimed the local security has passed a negative
opinion on Transnet, raising a geo-political dimension.
“He (Matiza) reported that it is not ideal to have a
neighbouring country invest in such a strategic state enterprise. He claimed
the army’s concern was that in case of mutual hostilities, the deal would leave
the country extremely vulnerable since South Africa would be having knowledge
and control over our systems and signals.”
Historically, South Africa has always used its economic
leverage to influence politics and events in Zimbabwe.For instance, during the
apartheid era, when problems arose between the then South African prime
minister John Vorster and Rhodesian prime minister Ian Smith, the South
Africans would simply disrupt the rail system and prevent critical goods —
including fuel — from being transported into the country.
Matiza also tried to pour cold water on DIDG’s recent
funding deal from African Export-Import Bank (Afreximbank) which was appointed
lead arranger to co-ordinate the syndicated loan.
Afrexim has agreed to coordinate funding and provide its
own US$100 million funding. The balance will come from South African and
regional banks which have provided term sheets for about US$1 billion.
Although cabinet resolved to cancel the deal, government
sources said the battle is still far from over.“There is a huge mobilisation
behind-the-scenes which started soon after the cabinet meeting ended on
Tuesday. Since then, there have been endless meetings and caucuses over the
deal. Some ministers who did not attend the meeting have also vowed to fight
for the deal to survive. It has triggered a messy fight in official circles.
Next week’s cabinet meeting will definitely be interesting
as sleeves have surely been rolled. We are also likely to witness a series of
fightback manoeuvres starting next week. There will be blood on the floor.
DIDG yesterday came out fighting back, pulling no punches
against Matiza.“We have been inundated by enquiries from media houses to
explain if the NRZ recapitalisation US$400m has been cancelled by cabinet. As
it stands, legally, the deal has not been cancelled.
We are yet to receive any communication from NRZ as we
can’t take a media article as the basis of communication of such an important
national matter,” DIDG said.
“The official position as communicated to us by NRZ is that
we are waiting for the Ministry of Finance to review and engage us and
Afreximbank on the funding which will lead to formal and procedural
recommendations to cabinet.
“Out of respect of the President, his office, government
and our adherence to the dictates of professionalism as guiding our restraint,
we have to date observed with shock and dejection how single-handedly the
honourable minister Matiza has been using his position and office to
misrepresent our company’s capacity and the progress we have made in closing this
deal which is pivotal to the economic recovery of our country Zimbabwe.”
DIDG said Matiza has been on a warpath against them and the
project for sometime now.
“We are gravely concerned by the conduct of the minister
who has been consistently misinforming the populace, the President, cabinet and
the entire government by misrepresenting the facts on a number of things
relating to DIDG and the recapitalisation project,” it said.
“For instance, only a few weeks ago Matiza has been
claiming that DIDG has no funding knowingly and sitting on the term sheets
reflecting over a US$1 billion that were first given to him on 1 October 2018
which means he has known the truth but denied and distorted if for more than a
year.
“Since then, DIDG proved its ability to fund the project
with Afreximbank support having been confirmed at the highest levels of both
government and the funding institution, in which Zimbabwe is itself a
shareholder. Matiza has now found an alternative reason being Transnet’s
failure to obtain its shareholder’s approval from the government of South
Africa. His actions fly in the face of government’s concerted efforts in
various local, regional and international fora to bring investment into
Zimbabwe. His actions completely negate the government’s re-engagement process
and investment drive.”
DIDG said Matiza made fundamental misrepresentations and
committed a “grave mistakes” in the process of misinforming Mnangagwa and
cabinet about the project.
“The minister has, in pursuit of an agenda we will never
understand, contradicted the President’s state-of-the-nation address position
and NRZ board resolution which clearly affirmed that DIDG had made tremendous
progress on the transaction… Matiza’s move is unilateral and confirms his
relentless desire to scuttle the deal for his own unknown interests.” Zimbabwe
Independent
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