NRZ deal dead in the wa­ter:

The Sunday Mail (Zimbabwe) - - FRONT PAGE - Africa Moyo and Dar­ling­ton Musarurwa

THE US$400 mil­lion deal be­tween the Na­tional Rail­ways of Zim­babwe (NRZ) and DIDG/Transnet is ef­fec­tively dead and buried and Gov­ern­ment might soon re-ten­der the project, a Cabi­net min­is­ter has re­vealed.

This comes as some stake­hold­ers tried to sal­vage the deal last week.

Though the lo­cal part­ners of Transnet, the Di­as­pora In­vest­ment and De­vel­op­ment Group (DIDG) had se­cured let­ters of com­mit­ment from South African banks to fund the trans­ac­tion, it emerged that Gov­ern­ment was mainly scep­ti­cal of the fi­nan­cial health of Transnet, in­clud­ing its re­cent con­tro­versy in neigh­bour­ing Botswana, where it re­port­edly did a shoddy job.

The Min­is­ter of Trans­port and In­fra­struc­ture De­vel­op­ment, Dr Jo­ram Gumbo, told The Sun­day Mail Busi­ness that Gov­ern­ment has con­cluded that the pro­posed deal is not good for the coun­try.

“The NRZ deal went to Cabi­net and was re­jected, you must have got­ten that in­for­ma­tion.

“The deal didn’t go through. When it was as­sessed, it was found out that it was not good for the coun­try,” he said.

Pressed to ex­plain why the deal was re­jected, Dr Gumbo noted that “Cabi­net de­lib­er­a­tions are not publicly dis­cussed”.

How­ever, it has since been es­tab­lished that Cabi­net unan­i­mously con­cluded that award­ing the ten­der to DIDG/Transnet was a risky un­der­tak­ing for the coun­try.

Sources be­lieve that the South African paras­tatal wanted to use the deal as lever­age to bor­row money from China.

“That is where the prob­lem is. It (Transnet) does not have the money and some lo­cals are the ones who looked for money on be­half of the com­pany.

“Re­mem­ber that this deal started dur­ing the time when Dr Obert Mpofu was still the Min­is­ter of Trans­port and In­fra­struc­ture De­vel­op­ment. Even dur­ing the Dr Mpofu era, DIDG/ Transnet said ‘if you give us the ten­der, we will get money from China’ and most min­is­ters said it would be ridicu­lous to al­low a com­pany to bor­row money from some­where then come and try to sell us that money again,” said a source close to the deal who re­quested anonymity as the is­sue is still sen­si­tive.

“It was there­fore sug­gested that we can just bor­row money from China on our own to avoid in­ter­est on in­ter­est (com­pound). So Cabi­net was not happy with the deal.”

But it is Transnet’s con­tro­ver­sial deal with Botswana last year that has been the most dam­ag­ing.

Botswana Rail­ways (BR) or­dered 30 coaches from the South African firm, and most of those that were even­tu­ally de­liv­ered had tech­ni­cal hitches.

There was also con­tro­versy on the way the deal was struc­tured.

While Transnet claims that it man­aged to clinch the Botswana deal through a com­pet­i­tive bid­ding process, which essen­tially opens up the process to many par­tic­i­pants, it has since emerged that it, in fact, was cho­sen from a se­lec­tive ten­der process that was fa­cil­i­tated by an un­named busi­nessper­son.

All this has since cast doubt on the abil­ity of the South African state-owned en­ter­prise to mean­ing­fully con­trib­ute to the lo­cal project.

“Transnet did not do other jobs well in the past. In Botswana, they are said to have messed on a wag­ons deal, where they claimed to have sup­plied new wag­ons and on com­mis­sion­ing, they could not work and it was found out that they were old,” added the source.

Transnet could not be reached for com­ment by the time of go­ing to print.

Dr Gumbo, how­ever, in­di­cated that go­ing for­ward, Gov­ern­ment “will look for new in­vestors” to re­vive NRZ.

But there are fears that the abortive NRZ deal will nat­u­rally dampen in­vestor in­ter­est in the as­set.

It is even made worse by the fail­ure of the Zis­cos­teel deal, where a deal with In­dian firm Es­sar was still­born.

Dr Gumbo dis­agrees: “Those who say the deal will have a bear­ing on in­vestors can say so but when you have been given a ten­der, the devil is in the de­tail. When you in­spect is­sues to do with re­pay­ment terms, in­ter­est rates, how the money will come, and the con­di­tions prece­dent and so on, you end up aban­don­ing the win­ner of a ten­der.

“So when one is awarded a ten­der, it does not mean the project is all yours, there would be lots of is­sues that have to be checked. We need to es­tab­lish what ex­actly is be­ing bought.”

Although there are in­di­ca­tions that the deal is doomed, dis­cus­sions are still con­tin­u­ing be­tween the par­ties in­volved, with the hope that it can still be sal­vaged.

Gov­ern­ment is cur­rently on a mis­sion to re­struc­ture State-owned en­ter­prises as they are viewed as a key en­abler to eco­nomic growth.

NRZ, Air Zim­babwe, Zis­cos­teel and the Civil Avi­a­tion Author­ity of Zim­babwe (CAAZ) are some of the paras­tatals that Gov­ern­ment is keen to re­vive.

Al­ready, Cabi­net has ap­proved a plan to as­sume legacy debts close to US$1 bil­lion that the se­lected paras­tatals have chalked up. NRZ has a legacy debt of US$348 mil­lion. A new law — the Pub­lic En­ti­ties Cor­po­rate Governance Bill — also seeks to fa­cil­i­tate the ef­fi­cient man­age­ment and ad­min­is­tra­tion of pub­lic en­ti­ties.

If the NRZ deal had sailed through, it is be­lieved that the rail op­er­a­tor would have been set on a path of sus­tain­able re­cov­ery.

Gov­ern­ment is cur­rently on a mis­sion to re­struc­ture State-owned en­ter­prises, such as the Na­tional rail­wys of Zim­babwe, as they are viewed as a key en­abler to eco­nomic growth.

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