Government has cancelled a US$400 million tender for the recapitalisation of the National Railways of Zimbabwe (NRZ), just over two years after handing the contract to the Diaspora Infrastructure Development Group (DIDG) and Transnet consortium.
The decision does not come as a surprise, given the government’s track record of botching up deals.
Although the government says it will soon re-open the tender, a legal dispute, similar to the one which held up the Beitbridge-Harare-Chirundu highway rehabilitation project, now looms.
At its peak, the NRZ used to move some 18 million tonnes of freight, but now only manages about three million tonnes. Efforts to recapitalise the NRZ have been on the cards since the late 1990s.
Reflecting Zimbabwe’s isolation from western capital at the turn of the century, which was followed by a pivot to China under the ‘Look-East’ policy, most of the abortive initiatives to get the NRZ back on track have been by Chinese entities.
Here, newZWire traces a timeline of the many failed efforts to save the NRZ:
July 9, 2003 – An MOU is signed with the China National Aero-Technology Import & Export Corporation (CATIC) for signalling equipment, rail steel and the supply of locomotives and coaches for urban commuters. The deal falls through after Zimbabwe fails to raise the funding needed for this project.
2004 – NRZ signs a US$110 million agreement with locomotive and rolling stock manufacturer, China CNR Corporation (now part of CRRC Corporation Limited) for the purchase of 14 mainline locomotives and 64 passenger coaches. NRZ struggles to raise the US$11 million deposit required, only making a US$2.5 million payment in 2006 and a further one of US$400,000 in 2008.
May 14, 2010 – The 2004 agreement with CNR is adjusted and limited to the supply of 10 mainline locomotives, at a total cost of US$29 million. NRZ converts the US$2.9 million paid towards the initial deposit, to a down-payment for the new arrangement. But the NRZ still fails to raise letters of credit for the purchase balance of US$26.1 million for the manufacturing to commence.
April 7, 2011 – An agreement is reached with China Poly Technologies for the rehabilitation of the Bulawayo – Victoria Falls line as well as the purchase of new locomotives. The project fails to take off due to lack of funding.
July 29, 2011 – Construction and engineering company, China Gezhouba, agrees to restore and modernise signalling and telecommunications and track infrastructure between Dabuka and Harare at a project cost of US$350 million. The project never takes take off, after the price tag is deemed too high for infrastructure for just one corridor.
August, 2014 – A consortium made up of China International Fund (CFI), Sino-Zim Development Private Limited, CITIC Construction and China Railway Eryuan Engineering Corporation (CREEC) signs an MOU for the rehabilitation of the Harare – Mutare line, during then President Robert Mugabe’s visit to China. The consortium submits a proposal, which the NRZ comments on, but no further progress is made.
May 19, 2015 – An agreement is signed with China Railway Eryuan Engineering Group Co., Ltd (CREEC) for railway network planning, rehabilitation of the Victoria Falls to Bulawayo and Bulawayo to Harare lines. The project would also include the supply of locomotives, wagons and signalling equipment. A feasibility report and technical bill of quantities shows US$403 million is required for the network rehabilitation. Discussions end in February 2017.
July 28, 2015 – An MOU is signed with China Harbour and Engineering Company (CHEC) for signalling and telecommunications on four mainline corridors, as well as supply of wagons and a 120T crane. The parties exchange technical information and CHEC produces a preliminary feasibility report, without a financial proposal. The financial proposal never comes.
September 30, 2015 – The adjusted 2010 CNR contract is once again varied to convert the deposit of US$2.9 million for the purchase of 31 wagons, which are eventually commissioned in Bulawayo on 4 November 2016, more than a decade after the original deal was agreed.
April 4, 2017 – Cabinet grants NRZ authority to float a formal competitive recapitalisation tender through the state procurement agency, seeking US$400 million.
May, 2017 – The then State Procurement Board flights the US$400 million NRZ recapitalisation tender.
May 30, 2017 – A pre-bid conference is held in Bulawayo, attended by 82 companies; 50 from Zimbabwe, 18 from South Africa, 8 from China and some from the UK and Belgium.
August 3, 2017 – The State Procurement Board awards the NRZ recapitalisation tender to the DIDG-Transnet consortium.
October 16, 2017 – Cabinet formally authorises the NRZ board to negotiate with DIDG-Transnet.
February 14, 2018 – Two agreements – a 12-month Framework Agreement setting out terms for due diligence – and a separate Interim Solutions Agreement, under which some Transnet equipment would be delivered to NRZ on a lease arrangement – are signed.
February 21, 2018 – President Emmerson Mnangagwa commissions rolling stock leased from Transnet, as part of a total consignment of 200 wagons, 13 locomotives and 6 passenger coaches. He says: “I am certain that this marks the turning point of our rail infrastructure as we endeavour to fully industrialise our economy.”
February 2019 – Signs of trouble start emerging. NRZ and DIDG-Transnet ask the Ministry of Transport and Infrastructural Development to extend the Framework Agreement, after negotiations between the two parties go beyond the expiry of the agreement.
March 21, 2019 – Government agrees to extend the Framework Agreement for six months, but removes an exclusivity clause to open the NRZ recapitalisation project to other potential investors. Government also gives the DIDG-Transnet consortium up to August 14, 2019, to provide proof of funds.
May 13, 2019 – DIDG-Transnet formally appeals against the government’s decision to remove the exclusivity clause.
June 13, 2019 – Transport Minister Joel Biggie Matiza meets the NRZ board and informs them that the DIDG-Transnet consortium’s appeal against the conditional extension of the Framework Agreement had been turned down.
August, 2019 – Ahead of the August 14 expiry of the extended agreement, it is reported that DIDG is to appoint Afreximbank as lead arranger to raise the US$400 million. Afreximbank, it is said, will provide US$100 million and raise the remainder from a syndicate of international banks.
September 9, 2019 – The NRZ board meets and resolves that the “offer/proof of US$420 million funding from the DIDG through Afreximbank be referred to Treasury to pursue and consider, inter alia, the availability of the said funding.” Chairman Martin Dinha says the Ministry of Finance’s Joint Venture Unit will now consider the DIDG proposal “so that we start implementing the project with urgency”.
October 1, 2019 – In his State of the Nation Address, Mnangagwa says DIDG has secured US$420 million for the NRZ project
October 16, 2019 – Government announces it had decided to issue a fresh tender for the recapitalisation of the NRZ. DIDG threatens to sue, action that would possibly add NRZ revival to the long list of key projects derailed by bureaucracy and legal trouble.