The battle over a US$400 million deal to recapitalise the National Railways of Zimbabwe (NRZ) could be headed to the courts, further delaying plans to fix the country’s collapsed rail network.
After government said it had cancelled the contract with the Diaspora Infrastructure Development Group (DIDG), claiming the consortium had failed to show it had the financial backing to complete the project, DIDG says it “strictly reserves its rights” and describes the cancellation as one driven by “malice”.
According to a statement released Tuesday via Information Secretary Nick Mangwana, government rejected the DIDG because it had shown funds sourced internationally, but excluding South Africa rail company Transnet, whose participation had been a factor in the consortium winning the tender. The tender would now be reissued to other potential partners, government announced.
“The exclusion of Transnet had a legal impact on the tender, which had been awarded to them as consortium. In light of the foregoing, Government took a position to issue a new tender. If any of the former members of the consortium want to compete, they are still eligible to make bids and will be adjudged fairly,” government said.
But reacting on Wednesday, Donovan Chimhandamba, head of DIDG, hinted that his company could take legal action.
“We have noted the official statement from a few government authorities. We have been dealing with such malice for the last 18 months and they had managed to hide behind various issues. Last week it was about funding, now it’s about Transnet. None of these parties has communicated anything to us, which we find disturbing. However, we remain resolute to our cause and strictly reserve our rights,” Chimhandamba said.
In 2018, as part of a temporary agreement, DIDG delivered 13 locomotives, 200 wagons and six passenger coaches on a lease arrangement to the NRZ. The delivery was touted as one of the early successes of President Emmerson Mnangagwa’s efforts to attract investment and repair the country’s decayed infrastructure. However, with the deal now in trouble, questions will emerge about how the deal went wrong and what government plans to do next to revive the NRZ.
At its peak, NRZ moved 18 million tonnes of freight per year, according to data from the Infrastructure Development Bank of Zimbabwe (IDBZ), which has been involved in efforts to refurbish national rail. In the first half of 2019, according to an NRZ report, the company moved just 1.3 million tonnes of freight, 8.5% down on the same period last year.
The US$400 million deal was meant to cover only the first phase of NRZ’s restoration. To get back on track, NRZ needs a total of US$2 billion in investment, according to an IDBZ assessment. The needed refurbishment comprises rehabilitation of the railway line network, construction of new railway lines, replacement of signalling equipment, new rolling stock – the locomotives, coaches and wagons – plus repairs to bridges, buildings and other supporting infrastructure.