The National Railways of Zimbabwe (NRZ) is in private negotiations with various potential investors and equipment suppliers, pending a formal termination of the USS$400 million investment deal with the Diaspora Infrastructure Development Group (DIDG).
The Government cancelled the deal with DIDG for lack of progress and has since directed invitation of fresh tenders as a matter of urgency.
As such, the NRZ has written to DIDG as guided by Attorney General’s office to initiate the formal tender termination process, which will eventually involve the Procurement Regulatory Authority of Zimbabwe writing to the consortium formally cancelling the deal.
DIDG has reportedly threatened to sue NRZ for terminating the deal and this may derail negotiations with other potential investors, thus further delaying the revival of the national railway operator.
“A new recapitalisation tender can only be issued after the formal cancellation of the tender,” according to a latest report by Treasury on the update of privatisation of state enterprises.
“Meanwhile, NRZ is in discussions with a number of potential funders and equipment suppliers for a phased recapitalisation plan.”
Calls seeking further comments for Minister on Transport and Infrastructure Development Biggie Matiza were not answered.
NRZ chairman Advocate Martin Dinha was not immediately available for comment.
NRZ is among enablers critical for the revival and growth of the economy.
Last year, DIDG said it had secured over $400 million for the recapitalisation of the of NRZ.
DIDG, a consortium of Zimbabwean investors living aboard won the contract to revive the struggling State-owned railway company in 2017, but implementation of the deal took longer following protracted negotiations between Government and DIDG. The initial framework agreement in which negotiations were to be concluded expired in February last year, but was extended to August 1, 2019.
DIDG had appointed the African Export-Import Bank (Afreximbank) as the lead arranger for US$400 million capital raise.
This was, however, subject to signing the joint venture agreements with the Government, which would have paved way for opening company accounts and the appointment of a transitional executive including non-executive chairman, interim chief executive officer as well as finance, technical and human resources executives.
DIDG also indicated it had received term sheets with funding in excess of US$900 million from the regional and international banks participating on the US$340 million debt facility to be arranged by Africa Import-Export Bank.
Afreximbank had expressed to provide a loan amounting US$100 million, TDB Bank US$75 million, Standard Bank US$317 million, while Nedbank and ABSA had pledged US$317 million and US$200 million respectively.
NRZ used to be one of largest employers in Zimbabwe but its fortunes waned after an economic meltdown between 2000 and 2008 that saw the country’s gross domestic product falling by an estimated 40 percent between 2000 and 2008.
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