NRZ board meets on project 

Source: NRZ board meets on project – The Zimbabwe Independent August 23, 2019


AS finalisation of the US$400 million National Railways of Zimbabwe (NRZ) revival deal, funded by the African Export-Import Bank (Afrexim) and other regional banks, gathers momentum, the board of the struggling rail operator is expected to meet next Friday to push for urgent implementation of the project.


The deal includes NRZ, Diaspora Infrastructure Development Group (DIDG) and South African rail, port and pipeline utility, Transnet.

Official sources say the NRZ board meeting’s agenda includes three major issues: Afrexim and other banks’ funding proposals; dealing with issues on the joint venture agreements and the implementation matrix. There are also related technical issues which will be discussed at the meeting that was initially set for this coming Monday.

Sources close to the US$400 million project told the Zimbabwe Independent this week that the August 30 meeting will review indicative term sheets submitted by the banks involved and other relevant issues.

“Following the appointment of Afrexim as the mandated lead arranger, NRZ officials and the board have been busy working towards finalisation of the agreements to pave way for corporatisation of the main joint venture agreement and implementation to commence soon,” a senior government official said. “In that regard, the NRZ board was supposed to meet this coming Monday, but the meeting was moved to next Friday where the funding, agreements as well as corporatisation, especially of Joint Venture 2 (JV2), and implementation matrix of the project will be discussed.”

This comes as technical issues associated with legal and transaction advisers have resurfaced, creating glitches which need to be removed by the principals of the deal for the necessary agreements to be signed and implementation for proceed smoothly.

Negotiations of the deal have previously been slowed down by a complex and convoluted legal process associated with the transaction being handled by Harare commercial law firm, Dube, Manikai & Hwacha (DMH).

DMH was appointed legal consultant by transaction advisers, Deloitte & Touche (Zimbabwe). The advisers are said to have been sometimes acting in an obstructive way. This week, sources said, they again came up with new antics.
Sources said the situation has been compounded by unco-operative behaviour on the part of some officials from the Ministry of Transport and NRZ who are acting in self-interest at the expense of the company and the project to resuscitate the nation’s dilapidated rail network.

Only this week talk was rife that some of the interested parties — which either lost the tender bid or want to gatecrash the project through the back door — are working with Ministry of Transport authorities to push their own renewed self-serving agenda. Some officials were heard in the corridors of power brandishing an old proposal by Dubai-based company, Feonirich Investment LLC, which had expressed interest in the deal without even bidding.

Documents seen by the Independent this week show Feonirich’s interest in the project despite its delay and eventual failure to participate in the bidding process. Efforts to talk to the company were unsuccessful. Attempts to get comment from Transport minister Joel Biggie Matiza also failed.

Sources said government officials pursuing self-interest on the deal are busy scouting for an alternative implementer trying to take advantage of the expiration of the framework agreement on August 14 despite that Afrexim has shown evidence of funds and readiness to syndicate more funding before the deadline. The framework agreement had been extended by six months from February 14.

Afrexim is now the mandated lead arranger and bank coordinator for the project. This means all banks involved will be syndicated through Afrexim which will contribute US$100 million from its own facilities.

According to the initial financing term sheets, seen by the Independent, Standard Bank was 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 had also expressed interest to channel US$100 million towards the project, while Trade and Development Bank (TDB), formerly PTA Bank, would provide US$75 million.

Latest information shows the term sheets submitted to NRZ by DIDG this week indicate Afreximbank will provide US$100 million; TDB US$75 million; Standard Bank US$317 million (minimum hold US$100 million); Absa US$200 million (minimum US$50 million) and Nedbank US$200 million (minimum US$50 million).

Local financial institutions will also contribute. Some of the institutions which have indicated interest in the project include Old Mutual, Imara Asset Mangement, ZimRe Holdings, Steward Bank and the National Social Security Authority (Nssa). CBZ Bank was also initially interested in the project.

This week it emerged Nssa is also coming on board.

Sources said despite the hitches, the NRZ board is happy with the funding and wants to push for the signing of the Joint Venture Agreement (JVI) to allow the official constituting of the New Concession Company (JV2) into which the recapitalisation funds will be channelled. The corporatisation of JV2 to run the project will then allow for full implementation of the project.

In terms of the structure of the deal, DIDG and Transnet came together in a 50-50 arrangement to form (JV1) which partnered NRZ to form JV2, under which the DIDG/Transnet consortium has 60% shareholding and NRZ 40%. Initially, the funds were meant to be released to JV1 to ensure the money is under the control of the South African-based consortium because of high country risk, but under the new arrangement the funds will be released to JV2.

NRZ board chairman Martin Dinha was not reachable for comment. He did not respond to enquiries sent to him.


  • comment-avatar
    ace mukadota 3 years ago

    Soon the railways of ZW will be up and running again – how many times have we heard these fairy tales comrades ?
    Next it will be Zisco or Air Zimbabwe