Titanic clash looms over US$400m NRZ tender

THE National Railways of Zimbabwe (NRZ) board has finally formally notified Diaspora Infrastructure Development Group (DIDG) of its decision to re-tender the US$400 million deal to recapitalise the moribund rail operator, six months after cabinet made the decision.

BY ANDREW KUNAMBURA

Following cabinet’s decision last October to cancel the tender awarded to DIDG in 2017, the consortium swiftly moved to instruct its lawyers, Atherstone and Cook Legal Practitioners, to lay the groundworks for the filing of a US$215 million lawsuit.

At that time, Transport Minister Joel Biggie Matiza instructed NRZ board chairperson Martin Dinha, through a letter dated 0ctober 30, to terminate the DIDG bid, while inviting potential suitors to vie for the multi-million-dollar project.

However, until now, the board, which was apparently not on the same page with Matiza who fought hard for the cancellation of the tender, had not done so.

Dinha last week wrote to DIDG informing them of the latest development, saying the move was necessitated by the consortium’s failure to raise the required working capital within the stipulated time frame. This is despite DIDG having provided indicative funding term sheets totalling over US$1 billion from financial institutions.

The initial framework of agreement expired on August 31, 2018 and was extended by six months.

Dinha, in the letter, said DIDG had failed to raise the money after the framework of agreement was extended, leaving government with no choice but to cancel the deal.

“The NRZ board has received guidance from the shareholder, the government of Zimbabwe to cancel/terminate the award of the tender to the Consortium. In the above regard the NRZ intends to formally submit an application to PRAZ (Procurement Regulatory Authority of Zimbabwe) for the cancellation/termination of the tender award to the consortium generally on the following grounds: termination/collapse of the relationship between DIDG and Transnet as a consortium for the purpose of bidding for and implementing the project; lack of board and shareholder authority/approval for Transnet SOC to conclude the project agreements,” Dinha wrote, in a letter dated March 20, 2020.

“Consequent to the foregoing you are hereby invited, within 14 days from the date of your receipt of this letter, to make any written representations as you may wish to make, if any, in respect of the intended application by the NRZ for the cancellation of the tender as aforestated.

“Should you also wish to make oral representations and you indicate in writing within 48 hours of your receipt of this letter your intention to do so, a meeting with the NRZ to which you are hereby invited to attend at 1000 hours on 15 April 2020 in the NRZ Boardroom 13th Floor, NRZ headquarters Fife Street between 9th and 10th Avenue,
Bulawayo, Zimbabwe will be arranged. Please note that the said meeting will only be arranged if, within 48 hours of service of, this letter on selves as aforestated, you indicate in writing your intention to make oral representations,” Dinha further wrote.

DIDG executive chairman Donovan Chimhandamba wrote back to Dinha yesterday objecting to the NRZ’s decision.

“We thank you for your letter dated 20 March 2020 received by us on the 25 March 2020. We do not believe that there is any good basis for your intended conduct and in the absence of any mutually agreed resolution; DIDG will legally challenge such an illegal and seemingly a constructive and retrospective termination process. For this reason, we intend to make both written and oral submissions to your fully constituted board at a convenient date and time,” Chimhandamba wrote.

He added that while DIDG would have wanted to come to the NRZ offices in Bulawayo to argue their case, they were unable to do so because of a three-week lockdown in South Africa over the outbreak of the Covid-19 disease.

“As you may be aware DIDG team is currently on statutory lockdown here in South Africa and thus are unable to attend the oral session at the suggested time and place notably on 15 April 2020 in Bulawayo, Zimbabwe. We, therefore, propose that a mutually convenient date be set by the two organizations whilst considering that the dates may continue to be affected by any changes in the lockdowns announced by both South African and Zimbabwean governments to contain the Covid-19 outbreak. We would like to highlight and underscore the imperative to allow DIDG to Jointly with NRZ get on with the business of resuscitating the National Railways per the agreed plans. We have jointly come a long way and have incurred significant costs which also at this point cannot be ignored. We believe your Board will continue to take the interest of the country at heart and act in accordance with the laws governing such transactions,” Chimhandamba’s letter reads.

DIDG, which availed indicative funding term sheets totalling over US$1 billion to the NRZ board and Matiza, is on record as dismissing the minister’s claims that its bid was terminated on the grounds that the consortium had failed to provide proof of funding.

On October 1 last year, President Emmerson Mnangagwa told parliament that funding for the recapitalisation of the embattled rail operator had been secured from DIDG, which had roped in the African Export and Import Bank (Afreximbank) as the mandated lead arranger.

The continental bank had expressed commitment to inject US$100 million into the insolvent rail operator as part of its mandate to mobilise resources required for the project to commence.

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