Transnet gets NRZ $400m tender
Government awards tender for recapitalisation
TRANSNET has landed the $400 million (R5.37 billion) recapitalisation tender for the National Railways of Zimbabwe (NRZ) after a successful bid last month, and it is now expected that the group will help breathe fresh capacity into the ailing Zimbabwean rails parastatal.
The Diaspora Infrastructure Development Group (DIDG) – made up of Zimbabwean investors and technical experts based outside the country – partnered Transnet for the bid to recapitalise the NRZ.
Transnet and the DIDG submitted bid documents for the tender process on July 4 and had subsequently been shortlisted alongside two other companies.
The State Procurement Board handled the bidding process with the assistance of Deloitte.
The board of NRZ and Zimbabwean Transport Minister, Joram Gumbo, have confirmed the winner from the tender process, highlighting that the NRZ has now been given the leeway to engage them for further discussion” and to start “having discussions on contract issues” in the next few weeks.
“I can confirm that we have received correspondence from SPB (State Procurement Board) that the Diaspora Infrastructure Development Group, in partnership with Transnet, has won the tender to recapitalise NRZ,” Larry Mavhima, the chairperson of the NRZ said yesterday.
Transnet is now expected to help NRZ raise its freight capacity and enhance its shipment volumes for this year and the following periods.
NRZ has earmarked to move 3.7 million tons of cargo this year after its capacity sagged to 3 million tons last year.
It will also have to settle debts that NRZ has notched up at a time when the railways company is seeking to replace or upgrade its fleet and equipment.
Officials also say the NRZ has in the meantime secured $5m for refurbishment and repairs to its existing infrastructure that include wagons and locomotives
The $5m has been secured from a local finance institution, according to Zimbabwe Deputy Transport and Infrastructure Minister, Michael Madanha.
The parastatal is also engaging Russian partners for financing to buy new locomotives and wagons in the short term.
“The winning bidder has to help with turning around NRZ and will essentially be a joint venture partner. It is good news for NRZ and this will help us have technical assistance and enhance our capabilities and capacity,” said Mavima.
According to informed sources, the immediate debt that the winning bidder will have to settle is about $140m.
The NRZ is viewed as a vital and potentially lucrative operation, given its extensive rail network, stretching over 2 760 route kilometres of 1 067mm gauge track, with links to South Africa, Mozambique, Zambia and Botswana.
According to auditor-general Mildred Chiri’s report, NRZ had a net current liability position of $219m, while it also suffered a $59.7m loss in 2016.
This brings its cumulative loss for the end of December 2016 season to $336.2m.
“This cumulative loss and net current liability position, along with other matters indicate the existence of a material uncertainty that may cast significant doubt over the NRZ’s ability to continue as a going concern,” said Chiri.
Zimbabwe has dragged its feet on privatisation of some key parastatals, although economists argue that commercialisation is the only way to lift the state corporations out of loss making.
However, the awarding of the recapitalisation tender for the NRZ to Transnet and the DIDG may signal a shift as President Robert Mugabe’s office pushes the ease of doing business frameworks to attract wilting investments into the economy.
The winning bidder has to help with turning around NRZ and will essentially be a jointpartner.