THE National Railways of Zimbabwe (NRZ)’s $400 million deal with a consortium led by the Diaspora Infrastructure Development Group (DIDG) and South Africa’s Transnet is now back on the rails after Cabinet gave a nod to the proposed tie-up.
Transport and Infrastructure Development Minister Dr Joram Gumbo confirmed the new development last night.
It ultimately leads to the last leg of negotiations before the deal takes off.
“Yes, I can confirm that Cabinet has agreed to the investment (by DIDG/Transnet). We will soon be meeting the investor to tie up the nitty-gritties,” said Dr Gumbo.
“I’m very happy about this development because the investors have a lot of resources they want to pour into the project to make it successful, and this includes reviving NRZ’s passenger and freight business.
“So, after concluding the negotiations, the first phase will begin in earnest,” he said.
DIDG/Transnet was recently announced as the preferred investor out of 85 companies that were interested in investing in the country’s sole rail company.
Our Harare Bureau gathered recently that South African banks — Standard Bank, Nedbank, Rand Merchant Bank (RMB) — and the Industrial Development Corporation (SA) have put up funding letters worth $1,2 billion for the project, of which $400 million is earmarked for initial investment in capital expenditure.
But the deal seemed to have run into some hurdles recently after questions were raised on the competence of Transnet to ably invest in the project.
However, it later emerged that much of the details and clarifications sought had in fact been 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.
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 1 000 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 signalling 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.