Frantic talks fail to unlock NRZ logjam

A SERIES of meetings this week aimed at ending the stalemate in the finalisation of the US$400 million National Railways of Zimbabwe (NRZ) recapitalisation deal failed to break the deadlock among the haggling parties as it emerged that they will not be able to meet the end of February deadline set by government late last year.

The meetings, which began on Monday, ended in Harare yesterday, with parties to the deal resolving to continue with negotiations until July this year.

South African rail, port and pipeline company Transnet and its partner, the Diaspora Infrastructure Development Group (DIDG) are locked in mind-numbing negotiations with government and the NRZ over the deal.

There have however been reports of sustained efforts by senior government officials to torpedo it through stringent due diligence processes.

This gave rise to speculation of a plot to muscle Transnet out of the deal and bring in a new partner.

The meetings were being attended by representatives from government, Transnet, DIDG, NRZ, legal advisors to the deal, Dube, Manikai & Hwacha (DMH) as well as its financial transaction advisors, Deloitte.

Similar meetings throughout last year failed to break the impasse, which now threatens to derail the multi-million-dollar deal key towards rejuvenating the moribund local rail operator.

In December, government ordered the parties to finalise the deal by the end of this month, a target which has since been missed.

NRZ public relations manager Nyasha Maravanyika confirmed the latest development, saying the meetings did not produce an agreement.

"There was no agreement. Negotiations are still going on. All parties, however, are still committed and, by July, we should be able to finalise the deal," Maravanyika said.

"What these meetings have basically done is to give the negotiations a confidence booster because all parties affirmed their commitment to it," he added.

Maravanyika also said the convoluted due diligence process, disagreements over the shareholding structure and an off-putting NRZ US$324 million debt were among the issues delaying the conclusion of the deal.

The Zimbabwe Independent previously reported that the commercial law firm DMH has been demanding an unusually large volume of details concerning Transnet in carrying out the due diligence exercise.

Parties to the deal also have sharp differences relating to the new shareholding structure and financing model of the project.

"The due diligence has been happening on all sides. We did our own while Transnet and DIDG did theirs. Deals of this nature can take up to five years before they can be implemented. The other issue has been the huge NRZ debt.

No investor wants to inherit it and our proposal was that it should be warehoused and then we would be able to repay it once we are back on full throttle," Maravanyika said, adding the recommendations for further negotiations have since been relayed to government.

Once parties conclude the lengthy negotiations and find common ground, cabinet will assess the preliminary agreements reached by stakeholders and decide on whether or not to approve the multi-million-dollar deal.

South African banks which include Standard Bank, parent company to Stanbic Bank, Absa, Nedbank as well as the Industrial Development Corporation of South Africa (IDC) have been waiting in the wings with an estimated US$700 million to rejuvenate the NRZ, a parastatal seen as one of the vital cogs in efforts to salvage Zimbabwe's creaking economy.

Ecobank of Kenya is also willing to inject US$100 million into the project while the CBZ has expressed commitment to pump in US$50 million.

Transport minister Joel Biggie Matiza had not responded to questions sent to him at the time of going to print.

Matiza has previously said parties to the deal should resolve their differences by the last day of February, failure of which government would call off negotiations and look for new suitors.