THE National Railways of Zimbabwe (NRZ) board is defying
implementing Transport minister Joel Biggie Matiza’s directive to re-tender the
entity’s US$400 million recapitalisation deal, citing punitive legal
implications associated with the move.
Following cabinet’s decision in October to cancel the NRZ’s
US$400 million tender awarded to the Diaspora Infrastructure Development Group
(DIDG) in 2017, the consortium swiftly moved in to instruct its lawyers,
Atherstone and Cook Legal Practitioners, to file a US$215 million lawsuit
against the rail operator.
At that time, Matiza instructed NRZ board chairperson
Advocate Martin Dinha, through a letter dated 0ctober 30, to terminate the DIDG
bid, while inviting potential suitors to vie for the multi-million- dollar
project.
“I wish to advise you that on 15 October 2019, following
consideration of the memorandum by the Minister of Transport and
Infrastructural Development on the status of the NRZ-DIDG-Transnet
recapitalisation project, cabinet, amongst others, directed that the agreement
for the recapitalisation of the NRZ involving DIDG-Transnet be terminated and a
fresh tender flighted for the equity participation in the project as matter of
urgency,” Matiza’s letter seen by the Zimbabwe Independent reads.
However, the NRZ board, which had already approved the
consortium’s bid before it was later terminated by cabinet, has not carried out
Matiza’s order.
Under the NRZ-DIDG US$400 million revival project, which
had attracted the interest of various regional banks waiting with over US$1
billion in the wings, the deal can only be reversed by the board working under
the minister’s instruction. At law, Matiza is not empowered to unilaterally
cancel the DIDG bid, which was now being assessed by Treasury before it was
subsequently overturned by cabinet.
Sources close to the botched transaction say the NRZ board,
which had already endorsed critical phases of the deal, was fretting over the
impending US$215 million lawsuit, if it pushed ahead with Matiza’s order to re-tender.
Atherstone and Cook managing partner Innocent Chagonda,
representing the consortium, told this newspaper on November 29, that
“re-tendering the deal will expose NRZ to a huge and embarrassing lawsuit …”
“The board is well aware of the legal implications of
carrying through minister Matiza’s directive to re-tender the project. The
board is mindful that an insolvent NRZ cannot afford to be dragged to court, in
what appears to be a protracted lawsuit against the well-resourced consortium.
This is why there is a lot of hesitancy on the part of the board to re-tender
the project in line with the cabinet decision. However, there are other
considerations apart from the legal consequences,” a source, who spoke on
condition of anonymity, told the Independent this week.
The NRZ is saddled with a US$500 million debt overhang, and
had pinned its hopes of recovery on the DIDG bid, taking delivery of 13
mainline locomotives, three shunting locomotives, 200 high-sided wagons and six
passenger coaches on a lease agreement in 2017.
Sources told the Independent that most board members were
also opposed to Matiza’s directive on grounds that the minister had acted
“unilaterally to overturn the DIDG bid and was fronting for a preferred
suitor”.
The board, sources said, had also taken into consideration
the considerable length of time it would take to find another partner with the
financial muscle to revive the moribund rail operator.
“There is informed belief that Matiza is attempting to push
out DIDG for a preferred partner of his choice. But the consequences are clear,
the parastatal is in shambles and it would take long before it finds an
investor with deep pockets to revive it”, a source said this week.
Another source, close to the working of NRZ and the contentious
DIDG transaction said the board had not moved an inch even after receiving
Matiza’s directive.
Instead, sources said, the board was still waiting for
Treasury’s “verdict on the DIDG bid”. Before the DIDG bid was thrown out by
cabinet, Treasury was still assessing the consortium’s proposal.
“So the board has not moved. We are still where we are when
the directive was made. We are waiting on Treasury to come back to us with
their assessment and verdict. The Ministry of Finance is yet to give us its verdict.
It was not the decision of the board to terminate DIDG’s
bid.“The board has a difficulty in handling this matter. On one hand, minister
Matiza instructs the board to prepare new terms of reference (ToRs) and request
for proposals (RfPs). But on the other hand (if you read his instruction to the
board) he says he will invite us to a meeting to discuss implementation of the
cabinet decision. So it is a difficult position,” a source said this week.
NRZ board chairperson Dinha could not comment on grounds of
sickness.The consortium, as it consults its legal team, has noted that the
US$215 million quantum of the looming lawsuit will take into account the
rolling stock it availed to NRZ in 2017, as well as “missed opportunity costs”.
DIDG, which availed indicative funding term sheets
totalling over US$1 billion to the NRZ board and Matiza, has since dismissed
the minister’s claims that its bid was terminated on the grounds that the
consortium had failed to provide proof of funding.
On October 1, President Emmerson Mnangagwa told parliament
that funding for the recapitalisation of the embattled rail operator had been
secured from DIDG, which had roped in the African Export and Import Bank
(Afreximbank) as the mandated lead arranger.
The continental bank had expressed commitment to sink
US$100 million into the insolvent rail operator as part of its mandate to
mobilise resources required for the project to commence. Zimbabwe Independent
0 comments:
Post a Comment