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Zimbabwe government scraps DIDG/Transnet joint venture, issues new tender for NRZ

Footage of some of the rolling stock crossing the border at Beit-Bridge from South Africa. The Zimbabwe government has now scrapped the deal.

 

By Nick Mangwana

 

A lot has been written about Diaspora Infrastructure Development Group (DIDG)-Transnet and their prospective joint venture with NRZ. It has become necessary for the Zimbabwe Government to put the record straight. Here are the facts:

In May 2017, Government through the then State Procurement Board (SPB) issued a public tender inviting bidders to help capacitate the National Railways of Zimbabwe (NRZ) to the amount of US$400 million.

On 3 August 2017, the SPB awarded the tender to the DIDG-Transnet Consortium. This was subject to Cabinet approval.

On 16 October 2017, Cabinet granted authority for the NRZ Board to negotiate with the consortium and once agreed, to come back and seek cabinet approval through the Joint Venture Unit.

On 14 February 2018, a Framework Agreement was signed between the parties for the purpose of performing mutual due diligence. An interim solution to plug the NRZ gap whilst negotiations continued was arrived at.

Framework agreement

The framework agreement was valid for 12 months.

It is the Framework Agreement and a separate Interim Solution Agreement that led to the delivery of 13 locomotives, 200 wagons and 6 passenger coaches on a lease arrangement.

After due diligence by both parties negotiations were initiated in October 2018, but could not be concluded within 12 months as per the Framework Agreement.

In February 2019, both parties made representations to the Ministry of Transport and Infrastructural Development seeking an extension to the Framework Agreement.

Government granted a conditional extension on 21 March 2019 for a period of six months starting from 14 February 2019. Part of the conditions was that the ‘exclusive clause’ in the Agreement be expunged and that the consortium was to provide proof of funds and shareholder approval before 14 August 2019.

On 13 May 2019, the consortium submitted a formal appeal against the above conditions. They wanted the extension period to commence on the date of signing and they also wanted the “exclusive clause” restored.

Several meetings between DIDG and NRZ leadership took place at which they also raised the concerns that were subject of their appeal.

Proof of the funds

On 13 June 2019, the Honourable Minister JB Matiza met the NRZ Board and informed them that the appeal to vary the conditions of the Framework Agreement Extension had been unsuccessful. They were reminded that the six-month extension was due to expire on 14 August 2019.

Government insisted on getting proof of funds from the consortium before the deadline. NRZ also committed not to enter a competing funding arrangement for the project before 14 August 2019.

On 30 August 2019, a Joint Plenary Session was held at a Harare hotel at which it emerged that there were serious differences between DIDG and Transnet (the Consortium). It is important to note that at this point, the parties had still not signed the Framework Agreement Extension they had applied for in February 2019 and therefore, there was no subsisting agreement between the parties.

Government indulged the consortium by working with them outside the Framework Agreement. Regardless they failed to present a common position.

DIDG presented a funding structure based on funds sourced internationally, which excluded Transnet. The exclusion of Transnet had a legal impact on the tender, which had been awarded to them as consortium

In light of the foregoing, government took a position to issue a new tender. If any of the former members of the consortium want to compete, they are still eligible to make bids and will be adjudged fairly.

Statement Issued by

Nick Mangwana is Secretary for Information, Government of Zimbabwe.

 

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