CABINET on Wednesday shipwrecked the National Railways of
Zimbabwe (NRZ)’s $400 million recapitalisation deal over funding, capacity
and internal squabbles, it has been established.
Transport minister Jorum Gumbo had presented a memorandum
to Cabinet seeking approval that NRZ should engage the Diaspora Infrastructure
Development Group/Transnet consortium (DIDG/Transnet). High-level sources said
disputes emerged over whether the consortium has the financial and technical
capacity to implement the deal.
“There also political squabbles around the issue with
factional and personal interests undertones although the genesis and structure
of the deal has little to do with the current Zanu PF factional and succession
dynamics,” a source familiar with the developments said.
In April this year, cabinet approved NRZ’s recapitalisation
proposal which sought to rehabilitate and modernise the current rail system and
the construction of new railway lines to link the country to the Indian and
Atlantic oceans. The recapitalisation plan was also aimed at speeding up the
settlement of the loan repayment arrears to the Chinese government in order to
unlock further investment from the world’s second-largest economy.
Following of the recapitalisation plan, 82 expressions of
interest were submitted to government and only six bidders submitted full bids
in compliance with the request for proposal before the deadline.
The six were China Civil Engineering Construction
Corporation; Crowe Howath Welsa; Croyeaux (Pvt) Limited; Sinohydro Corporation
Limited; Smh Rail Sdn Malaysia and DIDG/Transnet which eventually emerged as
the winner.
This process was overseen by an adjudication team composed
of 12 adjudicators and 11 observers who were drawn from the Ministries of
Transport and Infrastructural Development, Finance and Economic Development,
State Enterprises Restructuring Agency, NRZ Trade Union representatives and NRZ
officials.
Under the proposed recapitalisation structure,
DIDG/Transnet proposed the establishment of a joint venture company to be
incorporated in Zimbabwe comprising DIDG/Transnet and NRZ with a shareholding
structure of 65/35% respectively. The JV was tasked for rail operations and
recruitment of staff. The state-owned locomotive operator, NRZ would retain
ownership of all assets and lease to the JV those assets in return for royalty
fees.
The JV had also proposed a contract period of 25 years
based on an initial 16-year period for loan repayments, while the remaining
nine years would allow a reasonable return on investment. Government had
envisaged that the deal would among other reasons improve NRZ’s ability to
borrow funds without the need for sovereign guarantees; retire NRZ warehoused
legacy debts, as well as clean and shore up the balance sheet. The
recapitalisation proposal was also seen as a way of maximising use of
facilities and spares, utilisation and up-skilling of staff, as well as a key
enabler of economic activity.
Once the deal was finalised, Gumbo wanted the consortium to
re-negotiate the shareholding structure to ensure a win-win situation. Zimbabwe
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