eBusiness Weekly
Leonard Ncube in Victoria Falls —
The $400 million National Railways of Zimbabwe (NRZ) deal is set to be concluded before the end of the year paving way for the revival of the strategic firm.
NRZ recently sealed the $400 million funding deal with a consortium led by the Diaspora Infrastructure Development Group (DIDG) and South Africa’s Transnet.
Speaking at a press conference on the side-lines of the 2nd 2017 Southern African Railways Association (Sara) board meeting here, outgoing Transport and Infrastructure Development Minister Dr Joram Gumbo said change was imminent at the country’s railway company.
“As his Excellency President Emmerson Mnangagwa said, we must hit the ground running and that’s what we are doing.
“This meeting is taking place at a time when NRZ is in talks with Transnet and it is common knowledge that NRZ has not been doing well but with what has happened now we are very confident that the railway company will be back to the level of operation,” he said.
Dr Gumbo explained that he was not speaking as a minister but as a Member of Parliament and that he had sought clearance from the executive to officiate at the Sara board meeting since he had started the NRZ/DIDG-Transnet deal negotiations before President Mnangagwa dissolved Cabinet this week. Earlier his ministry had said the deal would need 18 months before work starts. Yesterday Dr Gumbo said timelines had been shortened.
“NRZ financial position is very bad hence it couldn’t attract investors and we thank the consortium for coming in. We are looking forward to ideas that can lead to strong interconnectivity and we hope before the end of the year we will have concluded discussions with
Transnet, which have been going on and as I speak Transnet is already putting together final touches hence now I can say it will be less than 18 months,” said Dr Gumbo.
“If the deal is concluded before Christmas holiday, you will definitely see change as the whole industry is now poised for resuscitation and things will soon change.”
Dr Gumbo said transport ministers at AU level were seized with measures to revitalise the railway system, which is key to economic development as it also reduces costs for consumers and producers. South African banks — Standard Bank, Nedbank, Rand Merchant Bank (RMB) — and the Industrial Development Corporation (SA) reportedly put up
Funding letters worth $1,2 billion for the project, of which $400 million is earmarked for initial investment in capital expenditure. DIDG/Transnet beat five other companies — China Civil Engineering Construction Corporation; Crowe Howath Welsa; Croyeaux (Pvt) Limited; Sinohydro Corporation Limited and Smh Rail Sdn Malaysia to secure the NRZ deal.
In the initial stages, 82 companies submitted bids for the parastatal. Essentially, the DIDG/Transnet has an ambitious three-year strategy that is premised on buying new locomotive and wagons and revamping operational efficiencies. From the $400 million capital expenditure, $150 million will be earmarked for 24 mainline locomotives and 13 rail shunters or shunting locomotives.
Twenty locomotives that are part of the current fleet are expected to be refurbished. Similarly, NRZ plans to acquire 1 000 new wagons and refurbish 700 that it presently has. It is also envisaged that more than $100 million will be invested in modernising and refurbishing the State enterprise’s train control and signalling system. The Sara board meeting is being hosted by the Beitbridge-Bulawayo Railways (BBR).
Speaking at the same occasion, Sara president Christopher Musonda said the future of the railway system looks brighter especially with the new political dispensation in Zimbabwe. He said Zimbabwe plays a bigger role in the railway network as it is central to the whole region.
“We are excited as a region as the changes have come with a lot of promises for Sara and this is a demonstration that we are coming out very strong. The fact that we have been operating daily as peace prevailed in Zimbabwe is a guarantee for business hence Sara secretariat will still continue being hosted here,” he said.
Musonda said Sara expects economic growth in the region hence the need for individual railway companies to focus on addressing backlogs such as spares shortages and others. He highlighted the need for public-private partnerships and direct investment.
