New twist to NRZ recapitalisation saga

November 28, 2019


THERE is a new twist to the recapitalisation deal of the National Railways of Zimbabwe (NRZ) barely 24 hours after the government re-tendered the project, Business Times can report. Fresh details have emerged indicating that the Diaspora Infrastructure Development Group (DIDG) had submitted proof of funding to Treasury contrary to the government narrative, Business Times has learnt.

The US$420 million deal was cancelled this year over DIDG’s supposed failure to avail proof of funding for almost two years, leading to the cancellation. But documents availed to Business Times revealed that DIDG actually submitted all the necessary documentation and proof of funding to Treasury as advised by the NRZ board.

In a letter addressed to DIDG’s Donovan Chimhandamba dated September 18, 2019, NRZ chairman Martin Dinha stated that: “Subsequent to the foregoing, a meeting of the NRZ board was held on September 9, 2019 to consider the report from the Special Joint Plenary meeting and resolved to recommend to government that; (a) a funding/ proof of US$420 million from DIDG through Afreximbank to be referred to Treasury to pursue and consider, inter alia, the availability of the said funding. “(b) The NRZ should await guidance from Treasury, on the availability of the said funding where, after, subject to such guidance as may be given by Treasury, the project be progressed in terms of the provisions of the Joint Ventures Act as previously directed by Cabinet communicated to NRZ through the letter from the Minister of Transport and Infrastructure Development dated October 16, 2017 to NRZ.”

A well-placed source told Business Times that DIDG is now considering seeking recourse following government’s cancellation of the mega deal. “Certain senior officials at Ministry of Transport are seriously conflicted in this matter and have been peddling lies. DIDG met all timelines and proof of funding provided. Why are these officials running with a narrative different to what the board had endorsed and resolved to do?” asked a source close to the developments.

“Further to supplying proof of funding we brought the banks into our meetings with the NRZ board and Inter-Ministerial Joint Task teams. The Afreximbank president even met with President Emmerson Mnangagwa in United States and confirmed the funding support. So can a president of such an esteemed bank as Afreximbank also lie?”

Transport and Infrastructure Development Minister Biggie Matiza could not be reached for comment as his phone went unanswered. At first it looked like with the signing of the $400 million between NRZ and DIDG/ Transnet, vision 2020 was achievable but it now looks like it was a wish that is never coming to pass. The DIDG/ Transnet consortium was chosen in 2017 as the NRZ’s technical partner in a $400 million deal which was aimed at recapitalising and rehabilitating the railway infrastructure.

The government, however, has since engaged Russia’s Union Wagons in bid to revive the rail company that requires more than US$1 billion to realise a complete turnaround. As efforts to revive the rail company are on-going, vandalism of equipment, a tanking economy and corruption, according to people with deep knowledge of the state owned firm, have destroyed the NRZ, once the bedrock of the nation’s economy.

At its peak, the NRZ employed 17 000 workers in the late 1980s. The staff compliment has dwindled to 4 600. Neglect, lack of spare parts and overdue replacement of equipment have led to a situation where only part of the railroad network is in good condition, and equipment problems have led to a reduced service. The company is sinking in debt, making it impossible to get out of the quagmire without external help. Freight declined from 18 million tonnes in 1998 to 4 million tonnes in 2015.

Vandalism has paralysed the communications system while the geographical spread of the network has made it almost impossible to adequately protect and guard it. The NRZ operates about 3 000 km of railway, providing passenger and freight services. The NRZ has an important transit function in the southern part of Africa and is well linked with neighbouring countries.

Towards the northwest, in Victoria Falls, the system links with the Zambia Railways, crossing the Victoria Falls Bridge. Towards the Indian Ocean, the system links with the Beira Railroad Corporation in Mozambique.

A second line towards Mozambique reaches Maputo. Another connecting line links up with Botswana Railways in the west to reach South Africa. A direct line to South Africa is provided from Bulawayo by the Beitbridge-Bulawayo Railway. Elsewhere, the electrified (25kV AC) 313km Gweru-Harare section has been seriously vandalised and the electric trains have since stopped operating.

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