Transport and Infrastructure Development Minister Biggie Matiza has declared war on the National Railways of Zimbabwe (NRZ) board and
top management over failure to fully implement his directive on cancellation of the US$400m recapitalisation deal of the rail transport parastatal.
The Diaspora Infrastructure Development Group (DIDG) deal with NRZ was cancelled following revelations by Matiza that the investment firm was
failing to raise funding for the transaction which is contrary to the NRZ board resolution which has not changed and endorsed the DIDG deal.
Business Times is reliably informed that Matiza is accusing the NRZ board and its top management for failure to effectively cancel the DIDG and is now considering axing the current general manager Lewis Mukwada together with the current board led by Martin Dinha.
A well-placed source close to developments said heads are expected to roll at the state-run rail company as Matiza looks at appointing people who are
flexible enough to drive his vision for NRZ.
At a board meeting recently, Matiza is alleged to have demanded the dismissal of Mukwada from his position, a move which was rejected by
the board leading to the current friction.
“Matiza has now resorted to pushing out NRZ GM and the rest of management in a bid to take control and illegally cancel a Bona Fide DIDG Tender.
At last week’s NRZ board meeting, Matiza called the board and
demanded the dismissal of Mukwada with immediate effect, something which the board has on record refused as it is without cause and tantamount to creating unnecessary legal battles,” the source said.
Matiza is even heard saying “I am dismissing the general manager and then will fire the entire board around October and November and replace them with people who are fit enough to carry out my instructions.”
Matiza said the shake-up at NRZ was all part of a restructuring initiative to modernise the rail company.
“The directive was only aimed at restructuring NRZ and come up with a structure that is in line with modern trends. There are no threats whatsoever,” Matiza said.
NRZ public relations manager Nyasha Maravanyika said a directive
was made by Matiza last Thursday but there was no fight between the
shareholder and the board.
“There is no fight and as you are aware NRZ is under government and what the Minister did was to share his vision with the board and management. This vision therefore entails the reorganisation and restructuring of NRZ including management,” Maravanyika said.
The proposed restructuring comes as DIDG executive chairman Donovan Chimhandamba accused Matiza of misleading government on DIDG’s position.
“Right from the outset, we must point out that these submissions are being made to you and your board following a reasonably long and good relationship that had been built for the period that we had been engaging each other,”
Chimhandamba wrote in a letter dated June 24.
“We place on record right from the beginning that since his appointment as the Minister of Transport, Matiza never liked our organisation.
We have had it on very good authority that he has been misleading our position to the authorities with a clear intention of wanting to secure the termination of this tender and to replace the same with other players who are known non-indigenous.”
Chimhandamba added: “The directive issued to your board falls outside the Minister’s mandate.
The undue pressure which is being exerted on your board by him and
other players is clearly unlawful and must be resisted.
We trust that your board will uphold the letter and spirit of our law and consider the merits and demerits of the case in dealing with this matter.”
The cancellation of the DIDG deal has faced massive challenges and resistance following revelations that it was done in bad faith amid
allegations Matiza cancelled the deal without following due process
while ignoring DIDG’s funding package that had strong backing from Afreximbank (the lead arranger), TDB alongside the South African commercial banks and infrastructure funds.
The DIDG/Transnet consortium was chosen in 2017 as the NRZ’s partner in a US$400m deal which was aimed at recapitalising and rehabilitating the railway infrastructure.
DIDG has since instructed its lawyers Atherstone and Cook legal practitioners to sue Matiza and NRZ for US$215m after the controversial termination of the consortium’s bid to recapitalise the rail company.
Government, however, has since moved on by engaging Russia’s
Union Wagons in a bid to revive the rail company that requires more than US$1bn to realise a complete turnaround. Sources have however, said that NRZ failed to provide US$1.5m deposit for 100 wagons valued at US$10m, raising questions on how the rail parastatal would deliver a US$1bn deal with the Russians.
The 100 wagons were supposed to have been delivered in January
- In contrast, DIDG delivered 14 locomotives and 200 wagons in February 2018 demonstrating the speed and capacity of the diasporans with less complicated financing structures.
At its peak, the NRZ employed over 17,000 workers in the late 1980s. Today the staff complement has dwindled to 4,600.
Freight declined to 2.6m tonnes in 2016 from 18m tonnes in 1998.
DIDG’s intervention boosted the volumes to 3.6m tonnes in 2018.