Source: Minister in NRZ funding storm – The Zimbabwe Independent May 17, 2019
TRANSPORT minister Joel Biggie Matiza could have mislead parliament this week when he told legislators that South African rail, port and pipeline company, Transnet, and Diaspora Infrastructure Development Group (DIDG) failed to mobilise the US$400 million required to recapitalise the National Railways of Zimbabwe (NRZ) despite being furnished with indicative bank term sheets totalling close to US$1 billion, the Zimbabwe Independent can reveal.
By Tinashe Kairiza
According to the financing term sheets, seen by the Independent, Standard Bank is ready to shell out between US$100 million and US$137 million, Absa (US$200 million), Nedbank (US$200 million) and Nedbank Zimbabwe (US$17,5 million) and the Industrial Development Corporation of South Africa (US$100 million). Ecobank Kenya has also expressed commitment to channel US$100 million towards the project, while Eastern and Southern African Trade and Development Bank will provide US$75 million.
The Commercial Bank of Zimbabwe has a US$50 million war chest.
This comes as Matiza and a cabal of senior NRZ managers, as well as transaction and legal advisers are said to be trying to sabotage the deal under the pretext of lack of funding to bring in their Chinese investors into the project through the back door.
Matiza on Wednesday told parliament that the South African-based consortium, which won the bid to revamp Zimbabwe’s dilapidated rail network in 2015, is struggling to secure funding for NRZ.
The minister was answering a question from independent MP Temba Mliswa.
However, DIDG said yesterday it had given Matiza documentation on the bank term sheets from various financial institutions that have mobilised close to US$1 billion to bankroll the project.
DIDG said Matiza was given proof of funding during all stakeholders meeting on October 1, 2018. The minister, however, says the term sheets are not binding, but DIDG insists that final term sheets — binding agreements setting forth the basic terms and conditions under which funding will be made — will only be issued upon completion and signing of all the relevant agreements for the project.
Protracted talks among parties to the deal were extended by a further six months in March to allow agreements to be finalised,but Matiza says NRZ has opened fresh negotiations with other suitors amid reports the minister and his allies want to smuggle in the Chinese into the deal without going to tender using the new non-exclusivity clause introduced during the extension of the framework agreement.
Term sheets seen by the Independent from various banks show that by October last year, the consortium was waiting in the wings with close to US$1 billion million ready to roll out the multi-million-dollar project.
DIDG chairperson Donovan Chimhandamba yesterday said Matiza’s claims that the project was being stalled by funding bottlenecks were incorrect and misleading. He said his company had the financial capacity — as shown by the term sheets and other sources which have not yet been announced — required to fund the project.
“We heard what the minister said in parliament, but the fact of the matter is that we have bank term sheets for close to US$1 billion. The term sheets are indicative of the intention to fund the project, but will only be finalised once we have the final agreements signed by all parties.
“On negotiations with other partners, we have not agreed to that. We are still discussing with NRZ outstanding issues, so it will be wrong to tell market about something which not been discussed with us and agreed upon.
“Meanwhile, we are continuing with our work to ensure the project agreements are finalised and we take off. That is why we gave them the term sheets; proof of our financial capacity to roll out the project. There is an agreed process and deliverables we are working on right now. So we don’t want to be distracted by such sort of issues. We have an obligation to deliver and we will deliver on this project,” Chimhandamba said.
He added: “It is important for people to know and understand there are agreements which the parties need to finalise and sign before funding is released. Yet some of the parties involved took more than a year to just look at these agreements which are essentially for securing the required funding. “Those parties have been sitting on those agreements. It would appear some people do not want the project to succeed so that they bring in their preferred failed bidders through the back door. But we remain focussed and will work with all the parties, government, NRZ and others to make sure the project succeeds.”
In terms of the deal, DIDG and Transnet are jointly expected to arrange funding, while Transnet will be responsible for manufacturing and supplying locomotives, as well as the provision of technical and operations expertise.
total of US$1,7 billion is required to comprehensively revamp the country’s obsolete rail network.
The project has already been unfolding with the provision of an interim rolling stock solution which comprises 14 new-age locomotives, 200 high-side wagons and seven passenger coaches.
The deal entails the full lease of rolling stock at below market cost, leveraging existing interchange agreement between Transnet and the NRZ, and provision of spares, support and maintenance for leased fleet.
However, progress has been sluggish owing to convoluted legal and technical negotiations among the parties involved amid concerns of sabotage.