Govt grants NRZ project status . . . Recapitalisation exercise subject to various incentives

THE Government has granted National Project Status to the National Railways of Zimbabwe (NRZ)’s $400 million recapitalisation programme subjecting the project to various incentives till its completion.

Speaking at NRZ’s pre-bid conference on Tuesday, Finance and Economic Development permanent secretary Mr Willard Manungo said in order to show full support and to ensure smooth implementation of NRZ’s recapitalisation project, the Government was granting it National Project Status, warehousing part of the company’s debt as well as conditional ring-fencing bulk freight cargo to rail and offering sovereign guarantees for any loan provided.

“The Government will grant incentives normally granted under this (National Project Status) arrangement which include, inter alia, tax exemptions on project inputs that are essential for this programme since the NRZ project entails importation of a lot of capital equipment, among other things,” said Mr Manungo.

The Government will also warehouse NRZ’s legacy debt of more than $140 million.

“The NRZ owes a variety of institutions, including employees, and is working with Government with a view to initially warehouse the debt off NRZ’s books and then jointly develop various strategies to deal with and liquidate these debts.

“The Government is amendable to ringfencing of bulk cargo to rail though this will be conditional to the railways having capacity to move the cargo after ring-fencing, and percentages of sharing between rail and road will be established for each commodity,” said Mr Manungo.

He also said the Government would provide appropriate security for any loans extended for the recapitalisation project.

The decline in general economic activity and the NRZ’s reduced operational capacity has seen the NRZ facing operational deficits and deteriorating liquidity over several financial years.

The deteriorating state of NRZ’s resources and infrastructure has seen its operational capacity, designed at 18 million tonnes, fall from 12,4 million in 1998 to 2,7 million moved in 2016.

The recapitalisation project involves the rehabilitation and renewal of plant, equipment, rolling stock, track, signalling and telecommunications infrastructure and the supporting information technology systems. To this end NRZ is floating an open end tender to finance the procurement of materials, equipment and systems required to realise the project. This open tender seeks to provide potential investors with the opportunity to come up with creative means of structuring their funding proposals without being restricted to any form of funding such as debt, equity or any combination thereof.

NRZ board chairman Mr Larry Mavima said the granting of the company’s recapitalisation programme a National Project Status would create a conducive environment for investors.

“This is a very key element and shows how serious Government is. It entails the provision of incentives to investors on the aspects of duty on equipment, income tax and various areas of operations. The status makes the business environment conducive to lure interested investors. This will ensure that the NRZ recapitalisation project takes shape,” said Mr Mavima.

He also expressed satisfaction at the number of potential investors that turned up at the pre-bid conference.

“As NRZ we are excited with the turnout at the pre-bid conference. This is a sign that NRZ is on the path to recovery. We had 82 bidders who are keen to work with us. Their interest to work with Zimbabwean companies like NRZ shows the potential we have in turning around the economy. We will definitely put a positive change to the industry.

“On the 4th of July we are going to close the bid applications, thereafter in about two weeks we will start to assess the bids and make recommendations to the board, which we will then forward to the Minister (of Transport and Infrastructural Development Dr Gumbo). It is expected that by the end of September, we will be in a position to start negotiating with the winning bidder on the contract and implementation,” said Mr Mavima.

NRZ is a pivotal player in rail transportation in the region with extensive rail network stretching 2 760 kilometres across Zimbabwe and the centre of Southern Africa, such as South Africa, Mozambique, Zambia and Botswana. It provides a vital link between the landlocked countries like Zambia and Democratic Republic of Congo and seaports in South Africa and Mozambique.@