EDITORIAL COMMENT: Bidder must give NRZ best possible deal

Source: EDITORIAL COMMENT: Bidder must give NRZ best possible deal | The Herald July 6, 2017

The recapitalisation of the National Railways of Zimbabwe (NRZ) appears to be on course, with the narrowing of interested investors from 20 that had expressed serious intentions to invest in the company in a debt or equity deal, to six that were unveiled by the State Procurement Board on Tuesday.

Of the six, only three appeared to have met the tender requirements. These are Swiss firm, Crowe Horwath Chartered Accountants, which said it could secure $2,5 billion, a local firm Croyeaux Private Limited which proposed to inject about $700 million and South Africa’s Transnet partnered with a local firm, Diaspora Infrastructure Development Group and submitted a tender in which they said they could provide $400 million.

NRZ requires $2 billion in the long-term to return to full operation and about $400 million in the short-term to scale up operation. We applaud the expeditious manner in which the matter is being handled. Only a few weeks ago, a pre-bidding conference was held which attracted 53 companies and now we are down to three companies, according to NRZ board chairman, Larry Mavhima.

What is also particularly encouraging is the fact that the winner could be known within the next 10 days. From the proposals that have been made by the three short-listed investors, they have sufficient capacity to ensure that NRZ returns to operation.

It is our hope that the adjudication process comes up with a winner that offers the best possible deal for NRZ. We also look forward to the winning bidder having the capacity to deliver what they promised in the shortest possible time because NRZ needs to be up and running, considering its critical role in economic revival.

There are a lot of stakeholders who are banking on the return of NRZ to full operation because it remains the cheapest mode of transport, especially for the movement of bulk goods.

This is especially critical for the mining and agricultural sectors which have been recording growth in terms of production. Companies such as Hwange and the GMB require a functional NRZ to move coal and agricultural inputs and produce to different parts of the country.

In the same vein, NRZ also owes $80 million in salary arrears and a huge debt of over $140 million. The coming in of an investor should enable NRZ to address these issues.

More importantly, it will wean-off the parastatal from the fiscus. This will enable the country to make some critical savings at a time when it was spending in excess of $200 million on parastatals.

Finance Minister Patrick Chinamasa recently indicated that Government’s desire was for parastatals to at least break even if they cannot make a profit.

We hope that the coming in of a new investor at NRZ will be complemented by the enforcement of good corporate governance and accountability, which has been one of the concerns raised on parastatals.

NRZ should also be given leeway to charge rates that enable it to operate viably since the new investor will want to get a return on investment.

We hope that the matter is finalised soon and that it will act as a benchmark for other parastatals intending to recapitalise.