NRZ investors fret over delays

NATIONAL Railways of Zimbabwe (NRZ) investors are fretting over endless delays in consummating the deal, especially after being announced as the preferred partner last month, it has been learnt.

A consortium made up of local investors, the Disapora Infrastructure Development Group (DIDG) and South Africa’s Transnet was announced as the preferred investor out of 85 companies that were interested in investing in the country’s sole rail company.

It is largely feared that negative signals from Harare might spook funders that are willing to bankroll DIDG/ Transnet.

The Herald gathered last week that South African banks — Standard Bank, Nedbank, Rand Merchant Bank (RMB) — and the Industrial Development Corporation (SA) that had put up funding letters worth $1,2 billion for the project, of which $400 million was earmarked for initial investment in capital expenditure, had enquired about the prospects of the deal in view of the seeming hurdles in the finalisation of negotiations.

Sources privy to the details of the current negotiations, who preferred to remain anonymous as they are not authorised to talk to the press, said growing anxieties were being driven by bureaucratic red tape, which is worryingly taking place after an elaborate adjudication process.

Much of the details and clarifications being sought, sources said, were actually submitted and evaluated during a process that involved the State Procurement Board (SPB), the Office of the President and Cabinet, Sera (State Enterprises Restructuring Agency), the Ministry of Finance and Economic Development and the Ministry of Transport and Infrastructure Development, among other Government agencies and departments.

But it has since emerged that apart from the delays, there are also growing fears that some businesspersons (names supplied) have been actively lobbying Transnet to rope them in the deal.

“Transnet ran its process to identify a partner to undertake the project and apparently chose DIDG, but some of the locals that were interested in the deal (names withheld) were not happy and have been working to torpedo the current arrangement.

“They actually went to Transnet and threatened to block the deal, but the South African company simply decided to ignore them,” said sources.

“And the delays in finalising the deal are now taking a toll on the new investors because some of the South African banks that were committed to bankroll the project are now making enquiries.

“During the adjudication process, all the details such as proof funding were actually submitted, and further clarifications were expected to precede the finalisation of the deal.

“However, this was expected to have been largely routine since a thorough vetting exercise had been concluded.”

It is also believed that initially there was scepticism about the calibre and character of the local investors that were partnering Transnet for the project, but subsequent appraisals had been able to establish their track record.

It was established that DIDG executive director Mr Donovan Chimhandama was involved in mega projects such as the $300 million titanium dioxide pigment production factory in Richards Bay Industrial Development Zone in neighbouring South Africa.

When contacted for comment last week, Mr Chimhandama referred questions to Government.

Attempts to get a comment from Transport and Infrastructure Development Minister Dr Joram Gumbo were fruitless by the time of going to print.

NRZ chairperson Mr Larry Mavhima did not respond to questions sent by The Herald.

Sources however said the deal is still on.

DIDG/Transnet emerged as a winning bidder from five other companies — China Civil Engineering Construction Corporation; Crowe Howath Welsa; Croyeaux (Pvt) Limited; Sinohydro Corporation Limited; Smh Rail Sdn Malaysia — that had been shortlisted for the deal.

In the initial stages, 82 companies submitted bids for the parastatal.

Essentially, the DIDG/Transnet has an ambitious three-year strategy that is premised on buying new locomotive and wagons and revamping operational efficiencies.

From the $400 million capital expenditure, $150 million will be earmarked for 24 mainline locomotives and 13 rail shunters or shunting locomotives.

Twenty locomotives that are part of the current fleet are expected to be refurbished.

Similarly, NRZ plans to acquire 1000 new wagons and refurbish 700 that it presently has.

It is also envisaged that more than $100 million will be invested in modernising and refurbishing the State enterprise’s train control and signaling system.

Johannesburg-headquartered Transnet is a state-owned enterprise that has interests in rail, ports and pipelines.

Employing more than 49 000 workers, Transnet held more than $27 billion in assets by March 31, 2017 and generated more than $5 billion in revenues during the same period.