Oliver Kazunga Senior Business Reporter
The Diaspora Infrastructure Development Group (DIDG)/Transnet Consortium, which won the tender for the US$400 million National Railways of Zimbabwe (NRZ) recapitalisation project, has expressed optimism to conclude the transaction by August this year.
Last week, Transport and Infrastructural Development Minister Joe Biggie Matiza told Parliament that Government had removed the exclusivity clause for the US$400 million deal after the investors failed to provide proof of funding for the project within 12 months of the framework agreement.
DIDG chairman Mr Donovan Chimhandamba, told our Bulawayo Bureau yesterday that all the parties involved in the recapitalisation project were working closely to finalise the deal within the stipulated time frame.
“We are confident that we will close the transaction and we are working on the ground to cover the gaps. With full co-operation from all parties, we should be able to finalise the deal,” he said.
“We are not sure where the minister is getting such advice from but those taking part in the joint plenary discussions and negotiations, which involve other ministries, we are all clear and aligned on the fund raising process in the capital markets and the funding commitments we have on the table.”
DIDG/Transnet won the tender to recapitalise and rehabilitate NRZ in 2017 and the investors were required among others to provide Government with proof of funding of the project. NRZ recapitalisation and rehabilitation project involves acquiring rolling stock, signalling equipment and information communication technology equipment. As far as progression to securing funding for the project, Mr Chimhandamba said:
“While it is important to note that the framework agreement was seen as essential by the parties, it is not a generic construct of the Zimbabwe National Procurement Act (SPB/PRAZ) and Ministry of Finance Joint Venture Act process.
“And, thus, does not encumber the actual tender award to the DIDG/Transnet Consortium, it is a holding agreement, which provides the “framework” within which the parties sought to work to accomplish a set of itemised activities within agreed time-frames”.
NRZ requires $1,9 billion in the long term to fully rehabilitate and recapitalise operations. To cover the resource gaps while waiting for the implementation of the US$400 million deal, NRZ is leasing 13 locomotives, 200 wagons and 34 passenger coaches from Transnet.
The interim solution has significantly capacitated the operations of the ailing parastatal, which at the time of the signing of the interim solution was moving about 2,7 million tonnes of freight annually. Last year, NRZ moved 3,4 million tonnes of freight. In view of the activities that are still outstanding under the framework agreement, Mr Chimhandamba said Transnet/DIDG Consortium requested and obtained approval for the extension of the agreement for a further period of six months.
He said the extension period covers up to August 14, 2019 to enable the parties involved in the deal to conclude the required activities and ensure that all project agreements were in place.
“We are engaged with the banks and in the process of mandating a lead arranger from one of the banks. The lead arranger will syndicate the structured finance from the lenders group, which combined have put on the table offers up to $900 million.
“This is a typical process, which requires certain key agreements that the three parties are busy concluding and we urge all stakeholders not to peddle statements that undermine these efforts or create confusion and uncertainty in the capital markets,” he said.