HomeAnalysisWe’re re-railing derailed NRZ: DIDG boss

We’re re-railing derailed NRZ: DIDG boss

THE National Railways of Zimbabwe (NRZ) has finally embarked on a recapitalisation programme meant to take the ailing state enterprise out of the doldrums. The consortium, which won the US$400 million recapitalisation tender, involves the Diaspora Infrastructure Development Group (DIDG) and South Africa’s Transnet. This week it delivered the first batch of rolling stock equipment. However, there has been concern that the equipment delivered is outdated, ramshackled and has been phased out in some countries. Zimbabwe Independent reporter Hazel Ndebele (HN) caught up with DIDG executive director Donovan Chimhandamba (DC, pictured) to discuss these issues as well as details of the recapitalisation. Below are the excerpts of the interview:
HN: How much rolling stock equipment have you delivered so far and what do you wish to achieve by this?

DC: We have delivered seven mainline locomotives, seven passenger coaches and 157 wagons. Our strategy by providing the leased rolling stock is part of what we call the interim solution for NRZ as we start the NRZ recapitalisation programme. It is an “interim solution” in the sense that this rolling stock is only to provide immediate rolling stock capacity to NRZ while we manufacture the new rolling stock to replace this fleet. It is important to note that the total lead time from ordering, through manufacturing to delivery, of a locomotive can take between 18 to 24 months. Providing this interim solution is a very pragmatic approach to de-bottlenecking and boosting NRZ’s immediate operational capacity and reliability while the rehabilitation programme starts as opposed to idling for between 18 to 24 months waiting for new locomotives.

HN: There are concerns that DIDG-Transnet is dumping unwanted equipment from South Africa which was phased out in that country. What do you have to say about this?

DC: The interim solution fleet is a combination of recently commissioned locos with ages between one and six years. They are in a very good condition and railway people deem these as fairly new as some locos are designed to have a useful life of up to 30 years. The notion that DIDG-Transnet is dumping unwanted equipment is totally incorrect and misleading. This equipment is the same equipment that Transnet is using on their railway network to move their freight. In the long term we are even starting to standardise the equipment we use on the entire North-South corridor and it is not efficient nor does it make sense to provide unreliable equipment to operate certain sections of the regional rail corridors if we control them.

People have to remember NRZ rail operations will now be run for 25 years by the joint venture partners on a ROOT (rehabilitate, own, operate and transfer) basis and only through concession operational revenues and efficiencies can we repay our funding.

HN: There has been concern that the passenger coaches delivered are outdated and are being phased out in other countries. What is your view on this and are there plans to bring in state-of-the-art coaches? If so, please give us a timeframe.
DC: It is unfortunate that some of these comments are generated without facts. The passenger coaches are new, very modern with advanced aircon, food and beverage utilities and comfort systems for a better passenger experience even for the lower class coaches.

We intend to make rail a transport system to go to for both freight and passengers for all classes and we can only achieve this by improving the quality of the passenger and customer experience. This will also stretch us to looking at train stations and ticketing sytems to improve total passenger experience. We will be foolish to think we can do this by providing phased out and low standard equipment. Our new coaches are parked now at Bulawayo station waiting for the handover and people are welcome to view and touch them.

HN: Other than the wagons and locomotives, what else does the NRZ US$400 million recapitalisation tender require you to do?

DC: The US$400 million is what we call first phase financing focussed on rehabilitation and not expansionary activities. It is designed to bring back the rail network system to an operational capacity above eight million tonnes a year, fix the signalling, perway and communication infrastructure so that the trains are operated safely, efficiently and provide reliability to our customers. The US$400 million will be spent roughly as follows, but guided by the priority works schedules the engineers provide: US$163 million for new and refurbished rolling stock which includes locomotives, wagons, passenger coaches and power cars. This will cover also workshop rehabilitation and re-tooling. A total of US$128 million will be for perway infrastructure, US$71 million for signalling systems and infrastructure, US$27 million for telecommunication infrastructure, US$7 million for information technology systems and the balance for contigency.

HN: Most railway tracks are dilapidated, are there plans to service these anytime soon?

DC: While it is correct to say track infrastructure is dilapidated, it is important to note that NRZ is not at a standstill. It is operational albeit at levels that are not up to desirable efficiency levels. You have portions of the rail network that require serious and immediate attention and these sections are where they have imposed speed restrictions resulting in slowing down of overall track velocity and capacity. The speed restrictions are there to avoid derailment or accidents on the damaged rail network sections. Our approach is based on what we call the vital works programme which is based on prioritising these damaged areas of the railway track. This programme will span over three to five years.

HN: Some experts in engineering argue that the upgrading of overhead line power systems and signalling systems should have been prioritised before delivery of rolling stock equipment. What is your view on this?

DC: I think it is fair to say most parts of the railway system need some upgrades but it is also not correct to say that rolling stock should come after complete rehabilitation of the rail infrastructure. NRZ is currently running and did 2,7 million tonnes of freight last year. One of the bottlenecks for not achieving more volume was lack of sufficient reliable tractive power. When de-bottlenecking an operating system, a pragmatic approach is to always address the system constraints one-by-one in a prioritised manner.

The constraint holding back NRZ today is rolling stock capacity. On addressing this, the constraint moves to perway and signalling infrastructure while things like technology help you modernise how you manage your rail operations. In terms of electrification you would be aware that we have brought diesel locomotives. In South Africa and many other parts of the world you will hear rail operators talking about “dieselising a track” as a strategy moving away from electrifying lines.
Electrification has numerous challenges assosciated with supply of reliable power, vandalism and cable theft in some parts of the world. This makes it more attractive to dieselise rail lines and move away from electrification.

Our approach is a pragmatic approach to de-bottlenecking NRZ rail system and increasing total system capacity, reliability and safety.

HN: We understand that DIDG is not going to focus only on the transport sector but will also spread its wings across other sectors such as agriculture and information communication technology. Tell us in brief the goals of DIDG in that regard.

DC: DIDG’s vision to drive the recapitalisation of Zimbabwe’s critical infrastructure. We have a phrase in our organisation we use to summarise our strategic focus called “Infrastructure of Things (IOT)”. We absolutely believe that for a country to drop down the cost of doing business, become efficient and competitive globally as a destination for investment in fixed productive assets and service industry, IOT should be up to standard. That means transport (road, rail and air), water, agriculture, power, energy and ICT infrastructure is DIDG’s business. Rail is just the start.

HN: It is being reported that your partner, Transnet, is bankrupt and not technically competent to co-manage NRZ. Please elaborate on this.

DC: This is one of those misinformed statements. If one goes on to Transnet’s website and pull out their annual results you can quickly assess their technical and financial capacity. Just for your information, Transnet in the last financial year moved 220 million tonnes while NRZ moved 2,7 million tonnes. It is mind boggling that a company that is moving 100 times more volume than our own railway company is viewed as technically incompetment for this job. Financially, last year Transnet had revenue of US$5 billion, Earnings before interest, taxes, depreciation, and amortisation of US$2 billion and a net profit of US$215 million under a tough operating environment.

In that same period, it invested in its own network through capital expenditure of about US$1,6 billion in one year and retained cash and cash equivalents of US$1,2 billion. So I do not understand how one comes up with a story that in Transnet we have a bankrupt and technically incompetent partner. In fact, have you seen the speed at which we are capacitating NRZ?

The trains are in Bulawayo already and we only got the final approval a few weeks ago. That’s the kind of speed and action that cannot be done by a group that is bankrupt or incompetent.

HN: It is also reported in some sections of the media that your company does not have capacity to carry out the NRZ project, that you are broke and that you won the tender because you bribed some people in the previous government. What is your comment on these allegations?

DC: I think there is a lot of mud-slinging towards our company and in some cases individuals like myself. Some of it comes from people genuinely not knowing the people involved, but some unfortunately from people with their own agendas to “derail” the NRZ project for selfish reasons (excuse the pun). In analysing our capacity, one will not find answers by looking for projects performed by DIDG prior to NRZ because there you will find none.

One needs to start by saying this is a group of more than 1 500 experienced professional individuals and companies in that diaspora that have put together their money and skills towards rebuilding Zimbabwe’s infrastructure. When one understands that then you will start looking for the answers in the right place. If you are looking for US$400 million in Donovan’s pocket, you will not find it, but I can tell you that the more than four million people in the diaspora and the balance sheet is way more than US$400 million.

One of the things we have noticed is that the ordinary Zimbabweans, for right reasons based on some deals from the past in Zimbabwe, have grown to believe that everything requires a bribe.

One article we found very funny and an injustice to profesional journalists was a recent article that said on one hand Donovan, DIDG and Transnet are broke but then in the same line the broke individuals paid a US$50 million bribe to Grace Mugabe. How does a broke person give someone US$50 million? Laughable at the least and does not deserve to be dignified with a response because one can easily draw the malicious intent in such irresponsible journalism and fake news.

Fact File: Donovan Chimhandamba

  • Born in Karoi, Zimbabwe, 38 years ago, but based in Johannesburg, South Africa;
  •  DIDG executive chair;
  • Studied Bachelor of Science degree (Hons) in Industrial and Manufacturing Engineering at the National University of Science and Technology (Nust, 1998–2002);
  • Studied for a Master’s in Business Administration at the Gordon Institute of Business Science (GIBS), University of Pretoria;
  •  Worked at Engen Petroleum Refinery as an industrial engineer, at Pretoria Portland Cement as an operations engineer, Vesuvius South Africa as general manager;
  • Former business development executive at South Africa’s Group 5 Construction;
  • Founded Arkein Capital Partners with AngloAmerican’s Sishen Iron Ore Community Development Trust; and
  • Chairman at Nyanza Light Metals, a company building a titanium mineral beneficiation plant in Richards Bay Industrial Development Zone.

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