Transnet wins $400m NRZ tender

Transnet wins $400m NRZ tender
NRZ requires about $2 billion to turn around its fortunes

NRZ requires about $2 billion to turn around its fortunes.

GOVERNMENT has awarded the tender for the $400 million recapitalisation of the National Railways of Zimbabwe (NRZ) to South Africa’s Transnet, which is partnering a consortium of non-resident Zimbabweans in the project, The Financial Gazette can exclusively reveal.
NRZ board chairman, Larry Mavhima, yesterday told The Financial Gazette that the Transnet-DIDG consortium had won the tender.
“I can confirm that we have received correspondence from SPB (State Procurement Board) that the Diaspora Infrastructure Development Group, in partnership with Transnet, has won the tender to recapitalise NRZ,” Mavhima said.
“DIDG’s bid price was $400 million, the amount which we were looking for. We have worked very hard for this since I came in as board chairman and now we have been given the authority to engage them for further discussion.”
There were five other bidders for the NRZ revival, namely China Civil Engineering, Sino Hydro, accountancy firm Crowe Horwath & Welsha, SHM Railway of Malaysia and Croyeaux Limited of Zimbabwe.
The NRZ board appointed a transaction advisor, Deloitte, and held a pre-bid conference in Bulawayo in May this year.
The recapitalisation programme is expected to re-equip the parastatal and make it competitive.
Over the years, diminishing revenues, coupled with the high operational costs, had seriously affected the NRZ’s reinvestment and maintenance programmes, to the extent that the locomotive and wagon fleet has been severely reduced.
The NRZ requires about $2 billion to turn around its fortunes, but the $400 million would help reposition the parastatals for self sustenance.
The company is a vital cog in the country’s economy and has potential to become an important regional transport hub.
The NRZ network provides a vital link between landlocked countries like Zambia, Democratic Republic of Congo as well as seaports in South Africa and Mozambique. It is hoped that the restoration of NRZ’s operational capacity will renew confidence in industry and make the parastatal a preferred and cheaper mover of bulk freight in and outside the country.
NRZ’s goods transport business, which at its peak was raking in about 95 percent of the company’s revenue, has declined to about 2,8 million tonnes of cargo annually from a peak of 18 million tonnes shipped in 1998.
DIDG is fronted by Johannesburg-based Donovan Chimhandamba and involves non-resident Zimbabwean professionals, mostly based in South Africa.
The vehicle has raised $400 million in structured finance, Chimhandamba told The Financial Gazette in June.
Part of the DIDG consortium’s proposal would entail the creation of a separate joint venture company with the NRZ, with Transnet providing the technical expertise, as well as its strategic assets and regional footprint.
“Transnet is a technical partner. It’s not just a financial solution, looking at the capital requirements. For us, the market is a regional play. The real value is in capturing the regional market and Transnet is key in that regard,” Chimhandamba said, citing the South African firm’s forays into Zambia and the DRC as well as its port infrastructure.
newsdesk@fingaz.co.zw

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  • JongweRachembera

    NRZ was the envy of many African countries, second only to South Africa. Over the years its been mismanaged like all the other parastatals. Experienced staff either left for greener pastures or were pushed out because of their race or not well connected to the political appointees. Recapitalisation alone will not breathe life into this company.

    • Kevin Mtetwa

      I hear NRZ workers have not been paid for over three years but they continue to come to work. Something not right, if they are not stripping the national railways they must be very patriotic.

      • JongweRachembera

        It would be great if it was pure “patriotism”, we don’t know for sure, maybe hanging on, on a promise to be back paid or running little businesses from within the NRZ to make ends meet, either way not a healthy situation. Interestingly if this were a private company with its owners not classed as “indigenous”, workers would be striking and threatening management.

      • nelson moyo

        NRZ workers still coming to work without their pay – not half wits but quarter wits.

  • Sharon Mvura

    Hope this works, with Zanu PF in power I just wonder

  • Nigel Tusker

    I know my beloved country, nothing will come out of this project. lets talk in 2019

  • Prophet

    Regai tione

  • nelson moyo

    Wonderful news – soon the railways will be up and running again – Larry Mavhima you are a true genius to get USD 400 million out of those South Africans – ensure they don’t try and give you rands instead – and get it soon as they are in the process of bailing out South African Airways to the tune of several billion rands ( bailing out SAA for the third time !)

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