HomeLocal NewsNRZ deal raises new questions

NRZ deal raises new questions

Tinashe Kairiza

IN the aftermath of cabinet’s shock decision to terminate the US$400 million National Railways of Zimbabwe (NRZ) recapitalisation project, new details have emerged on how the process was handled, amid concerns that Transport minister Joel Biggie Matiza might have manipulated cabinet discussions and the outcome.

Last week, government, through Information, Publicity and Broadcasting Service secretary Nick Mangwana, announced that the multi-billion dollar deal, which was awarded to the Diaspora Infrastructure Development Group (DIDG) in 2017, had been terminated on the grounds that the consortium failed to mobilise the funding required to implement the project.

Mangwana’s announcement last week startlingly came nearly 24 hours after the routine weekly cabinet meeting and subsequently official briefing.

Cabinet sources who spoke to this newspaper have raised a myriad of questions around the manner in which the deal was terminated, as communicated by Mangwana.
The announcement was not made during the post-cabinet briefing, as it is traditionally done in most cases, but via a statement by Mnangagwa.

“What is worth noting is that the surprise announcement by Mangwana to terminate the NRZ deal did not follow the normal procedure relating to most cabinet resolutions,” an official said.

“Coupled with that, it is also interesting to understand why the line minister (Matiza) could not take it upon himself to announce such a key resolution that has a bearing on the future of Zimbabwe’s critical rail network. The statement Mangwana read was coming from the line ministry (Transport).”

In the wake of the surprise reversal of the multi-billion dollar deal, government has not yet officially communicated with parties involved in the project who include DIDG, the mandated lead arranger African Export-Import Bank (Afreximbank) and Transnet, South Africa’s rail, ports and pipeline utility.

Following the cancellation of the deal which was now being assessed by Treasury after being approved by the NRZ board, DIDG said contrary to Mangwana’s announcement, the transaction was still solidly on track.

“We have been inundated by enquiries from media houses to explain if the NRZ recapitalisation deal has been cancelled by cabinet. As it stands legally, the deal has not been cancelled,” DIDG said last week in a statement.

DIDG chairperson Donovan Chimhandamba told the Independent this week that even after Mangwana’s announcement, government had not yet officially communicated with the consortium.

“There was no official communication. All we have seen are media reports,” Chimhandamba said.Matiza did not confirm whether it was cabinet’s resolution to terminate the multi-billion dollar deal, which has been the centrepiece of President Emmerson Mnangagwa’s efforts to revive the fragile economy.

Sources close to the multi-billion dollar transaction said there was need for clarity on whether there was a cabinet resolution or just a briefing and discussion.

“Besides the fact that NRZ was not officially on the agenda when cabinet met last week, it is also important to ask whether there was any substantive cabinet resolution on the matter. It is important that these questions are asked and answered.

“Secondly, we must also query why Mangwana instead of Matiza or any other minister announced the termination of the deal. Did cabinet make such a decision? If not, then whose decision was announced? Matiza’s?

“Other deals have also been discussed previously and the communication was handled in the proper manner. Why is the NRZ case different?” a source asked.

When news began filtering through that cabinet had thrown out the DIDG bid to turn around the NRZ, journalists called Matiza to understand circumstances surrounding the reported termination, but commenting officially or the Transport minister committed to addressing a press conference on the following day.

However, Matiza did not comment or call a press conference.“Beyond that, it is also worth understanding the matter in the context of its legality. Is it within government’s right to cancel off such a deal which had passed critical stages without seeking a legal position and consulting parties involved?
“Why were the other involved parties not given the right of reply? In the past, government has given involved parties the opportunity to show cause why authorities should not reverse deals. In the case of the NRZ, this was not been done,” a source said.

DIDG has already indicated that it is exploring all “legal options” in the aftermath of the shock announcement.NRZ board chairperson Advocate Martin Dinha said this week he has not received any formal communication on the purported project termination issue.

As DIDG battles to salvage the transaction, the deal has sharply divided government and sucked in the millitary, as the battle to control one of Zimbabwe’s largest parastatals intensifies.

Many ministers have joined forces with the NRZ management and board, bureaucrats and security bosses to fight back.As revealed by the Zimbabwe Independent in its exclusive series on the protracted transaction, Matiza had been making calculated manoeuvres and a spirited bid to derail the project to bring in via the back door a Dubai-based entity, Feonirich Investments LLC, which had failed to meet the tender process deadline.

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