DIDG loses exclusive rights to NRZ deal

GOVERNMENT has removed the exclusivity clause for the US$400 million National Railways of Zimbabwe (NRZ) recapitalisation deal after investors for the project failed to provide proof of funding within 12 months of the framework agreement.

In 2017, the Diaspora Infrastructure Development Group (DIDG)/Transnet consortium won a tender to recapitalise and rehabilitate the strategic railways firm.

Under the framework arrangement, investors (DIDG) were required among others to provide Government with proof of funding of the project.

And as part of an interim solution to NRZ resource gaps, the parastatal is leasing 13 locomotives, 200 wagons and 34 passenger coaches from Transnet. Responding to questions in Parliament over the issue, Transport and Infrastructural Development Minister, Joe Biggie Matiza, said although the framework agreement had been extended by six months to August this year, the exclusivity clause has been removed in order to allow competition from potential investors to the project.

The exclusivity clause empowered the consortium with exclusive rights to negotiate the US$400 million NRZ recapitalisation deal. And it is also understood that Government has started working on various proposed frameworks and models to resuscitate the parastatal, if the envisioned suitors fail to come up with a lucrative deal.

"We have many of our people who are either here or in the Diaspora but the fundamental issue is that of proof of funding that did not come.

"The final agreement within the 12 months expired and we had to give them an extension of another six months. We actually should not have done that," said Minister Matiza.

"We removed the exclusivity clause to allow other people, we could have had serious contractors who could have our rail ticking."

The removal of the exclusivity clause means that the proposed recapitalisation and rehabilitation of NRZ is now open to competition from other potential investors. In February, Cabinet extended the framework agreement period of the US$400 million recapitalisation project to August to finalise outstanding issues.

Min Matiza said the framework agreement was extended after South Africa's ambassador to Zimbabwe Mr Mphakama Mbete together with a delegation from DIDG/Transnet pleaded with Government to ‘relook" at the matter and give them an additional six months to produce the desired results.

"In give-and-take situations, we looked at the environment in which we were discussing these issues and we granted them the six months but without the exclusivity clause," he said.

"After that (expiry of the 12 months framework agreement), we removed the exclusivity clause and we also wanted to give them that opportunity to do that (finalise outstanding issues) and allow other competitors to come in. So, it does not prejudice anybody," he said.

Minister Matiza said the US$400 million deal was above board and DIDG/Transnet consortium won the contract to refurbish NRZ infrastructure as well as raise money for the project after a due diligence was done.

"On the issue of due diligence; it was done and that is how they managed to get the contract in the first place," he said.

Under the arrangement, the minister said: "There was a framework agreement in which they were given 12 months to raise that money, negotiate and bring all the relevant information that would give confidence to the Government.

"Within the 12 months, the consortium could not provide the information required or proof of funding and if those things are not there, we cannot expose ourselves to things that are not correct."

Minister Matiza said as Government they could not delay the recapitalisation and rehabilitation of NRZ as the entity was strategic to the country's economy.

The parastatal requires about $1,9 billion in the long-term to fully recapitalise operations.