NRZ’s US$400 million deal back on table
The Diaspora Infrastructure Development Group (DIDG), a consortium of Zimbabwean investors in the diaspora, has re-engaged Government in a bid to revive the collapsed US$400 million deal to recapitalise the National Railways of Zimbabwe (NRZ).
DIDG entered into a joint venture with South African logistics group and won the bid to help revive the struggling national rail operator in August 2017, but the Government terminated the deal in October 2019. The Government blamed the investors for failing to provide a viable funding plan. The Government owns 100 percent of NRZ.
The termination of the deal saw consortium partners slapping NRZ with a US$235 million lawsuit for cancelling the deal. Business Weekly has it on good authority that efforts were being pursued to revive the deal and discussions have already commenced.
“They are (consortium partners and the government) trying to find each other,” said one source who requested not to be identified because the matter in still private. “But the prospects (for reviving the deal) are quite high.”
Minister of Transport and Infrastructural Development Felix Mhona confirmed to Business Weekly in an interview that efforts were being made to resuscitate the deal.
“They wrote to the Ministry indicating the intention to revive the deal and that process is already underway,” said Mhona.
“But obviously there are things that need to be dealt with including court issues because as it stands now, they haven’t withdrawn the lawsuit.
“It is a process that has just began and we will allow the process to flow so that we will not jeopardise it,” Mhona added.
Deal termination
The government said the decision to cancel the deal came after the consortium partners missed the deadlines to provide a viable funding plan. This was after the initial framework agreement in which negotiations were to be concluded expired in February 2019.
This was extended by six months in which, the investors managed to secure funding from the African Export-Import Bank appointed lead arranger for the transaction.
In a letter to NRZ chairman Advocate Martin Dinha in August 2019, DIDG executive chairman Donovan Chimhandamba, said funding for the project had been secured.
“Following the extension of the framework agreement by the Government of Zimbabwe by a further six months from 15 February 2019, we are pleased to confirm that as the Diaspora Infrastructure Development Group have raised the required US$400 million funding for the NRZ recapitalisation project, including an additional US$20 million to address startup and working capital requirements of the Joint Venture Concession Company,” said Chimhandamba said.
“We also confirm that as DIDG we have our shareholder approvals and we are ready to proceed with the implementation of the project.
“We are also pleased to inform you that as DIDG we have appointed the African ExportImport Bank as our mandated lead arranger for the NRZ US$400 million recapitalisation project.”
The deal was, however, subject to signing the joint venture agreements, which would have paved way for opening company accounts and appointment of a transitional executive including non-executive chairman, interim chief executive officer as well as finance, technical and human resources executives.
The release of the funds would have been subject to obtaining approvals including the consents, authorisation, licenses and certificates from the appropriate authorities and institutions.
Adv Dinha and Chimhandamba were not immediately available for comments by the time of going to print.
NRZ was among the country’s biggest employers, but its fortunes waned due to an economic crisis between 2000-2008 that saw Zimbabwe’s economy contracting by 45 percent.-ebusinessweekly.co.zw
