Transnet in Zimbabwe rail venture
Zimbabwean President Emmerson Mnangagwa chose a ribbon-cutting ceremony marking the start of a joint venture between SA and Zimbabwe on Wednesday to declare the country "open for business".
The National Railways of Zimbabwe (NRZ) took delivery of seven mainline locomotives, seven passenger coaches and 157 wagons from a consortium made up of Zimbabwe’s Dias-pora Infrastructure Development Group (DIDG) and SA’s state-owned rail transport group Transnet, under a six-month interim arrangement to help Zimbabwe tackle its immediate rail-transport needs.
Mnangagwa said the joint venture began a $1.76bn infrastructure recapitalisation project, under which the interim lease formed part of a $400m railway recapitalisation tender.
The tender was won by the DIDG-Transnet partnership in 2017. The original bidding had 82 contenders that were whittled down to six: China Civil Engineering, Sino Hydro, Crowe Horwath & Welsha, SHM Railway of Malaysia and Croyeaux of Zimbabwe.
Deloitte was the adviser for the transaction.
Full delivery will eventually include 24 mainline locomotives and several hundred other units of rolling stock. The project, known in Zimbabwe as "the road to rail intervention", is intended to raise the country’s rail capacity to 8-million tonnes a year and upgrade the signalling, perway and communications infrastructure.
The NRZ’s freight capacity has dropped from 8-million tonnes at its peak in 1998 to about 2.8-million tonnes in 2017. Freight accounts for 95% of the company’s income.
The DIDG is headed by Johannesburg-based chairman Donovan Chimhandamba and is funded by Zimbabwean professionals, mostly living in SA. The firm says its main motive is to attract foreign capital and skills to develop and privatise Zimbabwe’s critical infrastructure.
The Zimbabwean government will not provide any financial guarantees, according to Joram Gumbo, the executive chairman of NRZ, while Transnet CE Siyabonga Gama said Transnet will not be financing the joint venture. He said it will be funded by its customers.