Picture: REUTERS
Picture: REUTERS

Zimbabwe’s cabinet has apparently cancelled a $400m (R5.3bn) tender awarded to a joint venture between Transnet and the Diaspora Investment and Development Group (DIDG), to revive the National Railways of Zimbabwe (NRZ).

Transport minister Jorum Gumbo was quoted by a state-controlled weekly newspaper on Sunday as saying the deal "was not good for the country", and that the cabinet had made a decision to annul it.

"The NRZ deal went to Cabinet and was rejected … the deal didn’t go through. When it was assessed, it was found out that it was not good for the country," he said, without giving specifics about the government’s reservations.

However, knowledgeable sources familiar with the deal said cabinet questioned the financial and technical capacity of the joint venture to effect a turnaround at the ailing parastatal, amid suggestions that cabinet prefers a Chinese firm to be awarded the lucrative tender.

In August, Business Day reported on how eyebrows were raised in Harare’s political corridors when the tender to revamp the NRZ was given to Transnet — which is in a bind over its Gupta links and is also in a precarious financial position — while its partner, DIDG, is little-known.

This is the latest cancellation of the tender and is likely to put Zimbabwe back on the hunt for a new partner to take on the tender. A deal struck with the Development Bank of Southern Africa three years ago failed to materialise,

Transnet beat five other shortlisted bidders: China Civil Engineering — Sino Hydro; Crowe Horwath & Welsha; SHM Railway of Malaysia; and Croyeaux of Zimbabwe — to win the $400m tender.

On Tuesday, Donovan Chimhandamba, DIDG director said there had not yet been any communication from authorities in Zimbabwe over the cancellation of the tender.

"We have not received any official feedback from NRZ. The only information we are getting has been what we read through the media reports. We still see this as part of a probably long, protracted negotiation and clarification of issues where there might be issues raised. We remain committed to seeing this transaction through," said Chimhandamba.

At its peak in the 1990s, NRZ had a workforce of 12,000, which is now down to about 5,000, with employee relations severely strained by the nonpayment of salaries.

Industrial action — the longest lasted three months in 2016 — has also hurt frail revenues.

NRZ’s operations have been severely affected by debt of about $70m, ageing equipment, outdated locomotives, defunct track signals and a dire need for infrastructure rehabilitation.

Cargo volumes transported have declined steadily, hovering at about 1-million tonnes from 3.5-million tonnes in 2014.

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