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Zimbabwe to embark on a US $400m rail project

The Zimbabwean cabinet has given a nod to an investment deal between the National Railways of Zimbabwe (NRZ), the Diaspora Infrastructure Development Group (DIDG) and South Africa’s Transnet. The deal is to construct a rail line at a cost of US $400m.

According to Dr. Joram Gumbo, the Transport and Infrastructure Development Minister the new development ultimately leads to the last leg of negotiations before the deal takes off.

Additionally, the investors have a lot of resources directed towards the project to make it successful. This includes reviving NRZ’s passenger and freight business. However, phase I will commence in earnest after the conclusion of negotiations.

DIDG/Transnet was recently announced as the preferred investor out of 85 companies that are interested in investing in the country’s sole rail company.

Also read: Zimbabwe set to become regional power hub

Recently the South African banks, Standard Bank, Nedbank, Rand Merchant Bank (RMB), and the Industrial Development Corporation (SA) have put up funding letters worth US $1.2bn for the project, of which US $400m is earmarked for initial investment in capital expenditure.

Nevertheless, the deal seemed to have run into some hurdles recently after questions were raised on the competence of Transnet to ably invest in the project but, it later emerged that much of the details and clarifications sought had in fact been submitted and evaluated during a process that involved the State Procurement Board (SPB); the Office of the President and Cabinet (OPC), Sera (State Enterprises Restructuring Agency), the Ministry of Finance and Economic Development and the Ministry of Transport and Infrastructure Development, among other Government agencies and departments.

Other bidders

DIDG/Transnet emerged as a winning bidder from five other companies, China Civil Engineering Construction Corporation; Crowe Howath Welsa; Croyeaux (Pvt) Limited; Sinohydro Corporation Limited; Smh Rail Sdn Malaysia that had been shortlisted for the 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 locomotives and wagons and revamping operational efficiencies. From the US $400m capital expenditure, US $150m 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 1000 new wagons and refurbish 700 that it presently has.

It is also envisaged that more than US $100m will be invested in modernizing and refurbishing the State enterprise’s train control and signalling system. Johannesburg-headquartered Transnet is a state-owned enterprise that has interests in rail, ports and pipelines. Employing more than 49, 000 workers, Transnet held more than US $27bn in assets by March 31, 2017 and generated more than US $5bn in revenues during the same period.

Dorcas Kang'ereha
Editor/ Business Developer at Group Africa Publishing Ltd


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