NRZ deal inches closer

GOVERNMENT has, in the last three weeks, been locked in negotiations with
the Diaspora Infrastructure Development Group (DIDG) and South Africa’s
Transnet, as efforts to wrap up the US$400 million deal to revive the
National Railways of Zimbabwe (NRZ) gather momentum.

DIDG and Transnet won the tender to invest in NRZ.

Cabinet approved the investors’ deal on October 16, and negotiations –
aimed at ensuring that the country gets a “good deal” – begun in earnest
since then.

However, negotiations to tie up the NRZ deal went a gear up in the last
three weeks as DIDG/Transnet officials arrived in the country to seal the

Transport and Infrastructure Development Minister Dr Jorum Gumbo told The
Sunday Mail Business last week that there are frantic efforts by both
parties – Government and DIDG/ Transnet – to conclude the negotiations.

This comes as some sources claimed that the deal had derailed again, amid
allegations that the investors did not have funds to kick-start the
project, raising the possibility of going back to tender.

But Dr Gumbo thumbed his nose on the claims, saying the funds were always
going to be provided by Transnet, which was going to borrow from several
financial institutions in South Africa.

“Who said that (that DIDG has no money)? Those are the rumours peddled by
people who realise that they can’t get bribes from national projects.

“Their idea is to scuttle investment deals to ensure that their preferred
investors can get contracts so that they get bribes. That is what was
happening on the road deal (the Harare-Beitbridge road).

“Get it from me, DIDG has the money (to undertake the project). We have
the letters which suggest that they will get money from five banks,
including Standard Bank (of South Africa). So I don’t know where these
day-dreamers are getting that information from,” said Dr Gumbo.

He explained that the investors have been in the country in recent weeks
to thrash the deal. Negotiations could have continued last week, but were
called off by Government to allow senior management and board members in
the Ministry of Transport and Infrastructure Development to hold a seminar
to discuss the ministry’s budget for 2018.

The seminar comes up with budgets required by the various departments
under the ministry and the Minister forwards them to the Minister of
Finance. Said Dr Gumbo: “We are busy with negotiations. Do they (the
sources) think that negotiations can start and end in one day? We are now
very advanced with negotiations discussing the issue.

“This week (last week), negotiations stopped simply because Transport and
Infrastructure Development ministry officials and board members were
attending a seminar in Bulawayo, otherwise they (investors) were here in
the last two weeks having those discussions.

“Discussions are tricky, you don’t just award people a tender and allow
them to start working tomorrow; you need to agree on several things before
they start so that the people of Zimbabwe get a good deal.”  The deal to
revive NRZ had earlier hit turbulence after disagreements erupted in
Cabinet, with some ministers arguing that the arrangement was not
favourable for the country.

But after a second look at the DIDG/ Transnet’s proposal, Cabinet then
okayed the deal, paving the way for various local technocrats from both
the Government and investors’ sides.

Local technocrats who are part of the negotiations are drawn from various
key departments such as the Ministry of Transport, the NRZ, Ministry of
Finance, the Attorney General’s office and the Infrastructure Development
Bank of Zimbabwe (IDBZ).

The technical negotiations are in line with best practices when concluding
an investment deal of NRZ’s magnitude.

It is expected that once the engagements have been positively concluded,
the agreements will be taken back to Cabinet to apprise principals of what
would have been agreed. Cabinet will then review the agreement and if the
deal is “good”, the investors will start rolling out the operations. Once
an agreement has been reached, existing and former employees are expected
to be the first beneficiaries, as there will be royalties to cover their
wages and salary arrears. NRZ has been battling to pay salaries to
employees due to cash-flow challenges. Employees are currently owed almost
US$100 million.

DIDG/Transnet is also expected to deliver 480 wagons and 14 locomotives
immediately after the signing of the Memorandum of Understanding. There
will also be speed trains to ply the Harare-Victoria Falls route to give
tourists cheaper means of transport, and also an opportunity to have a
better view of the country. At its peak in the late `80s, NRZ had 20 000
employees but the numbers came down to 12 000 in the `90s before further
slumping to the current 5 700. Founded in 1897 as the Rhodesia Railways,
the NRZ’s motto is “We move the nation”. It is hoped that once the
DIDG/Transnet deal is concluded, the company will resume its role as it
cuts across several sectors of the economy such as farming, mining,
transport, and others.