BY MTHANDAZO NYONI
THE National Railways of Zimbabwe (NRZ) has drafted 17 agreements that have to be concluded before a $400 million recapitalisation deal with foreign investors is concluded, an official has revealed.
The Diaspora Infrastructure Development Group and South Africa’s Transnet consortium won a bid to partner NRZ in the $400 million recapitalisation project last year. However, the deal is yet to be concluded with partners failing to meet set deadlines.
NRZ general manager Lewis Mukwada told journalists recently that before concluding the deal, parties needed to agree on core agreements.
“For the time frames, we need to deal with staff issues and what we are going to hand over to the consortium.
“It’s not everything that we are going to hand over. We are actually going to agree asset by asset,” he said.
“Our transaction advisors came up with something like 17 agreements that we need to conclude before everything has been wrapped up, but at the moment we have got what we are calling core agreements.
“There are two or three main agreements that we are working on, then others are subsidiary to that.”
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Mukwada said the complexities emerged as they moved towards concluding the transaction.
“We were now realising that the initial timelines that we had put were really ambitious. It’s more complex than what we had expected, hence the shift in the timelines that we had set,” he said.
Mukwada said after the tender was awarded, they summarised the deal and sent it to Cabinet, which then gave them the authority to negotiate.
“So at the moment we are still in the process of negotiating the deal. The approval was that we negotiate the deal. So we are in the process of negotiating the deal,” he said.
The project would involve the rehabilitation and renewal of plant, equipment, rolling stock, signalling and telecommunications infrastructure and the supporting information technology systems.
It will also see the repairing and rehabilitation of infrastructure and equipment such as locomotives, wagons and coaches, as well as phased modernisation of the train control system.
The deal, if it sails through, Mukwada said, would see a special purpose vehicle (SPV) being formed.
The company would specifically focus on the cargo and passenger business while NRZ would remain, but a very small unit.
“This company, the SPV, will take over NRZ’s staff, it will take over NRZ equipment as well as buy new equipment, locomotives, wagons, rehabilitate the infrastructure and replace what needs to be replaced,” Mukwada said.
“So this SPV will then run the Railways for 25 years. It will be a concession that will take over and run it for 25 years, after that they hand over to NRZ. The remaining NRZ will look at non-core business.
“We do have non-core business like the real estate and other business lines that are not really core.
“On the other hand, we will also be like custodian or authority. That is the structure that has been proposed.”
Mukwada said the NRZ would lease its equipment to the new company instead of selling it.
