Transnet among bidders in R7.7bn Zimbabwe recapitalisation

At least 21 companies are vying for a formal tender that opens on Tuesday in Bulawayo, Zimbabwe's second-largest city, for the recapitalisation of the National Railways of Zimbabwe (NRZ), which operates almost as an empty shell.

It is understood from people close to the tender process that Transnet Freight Rail, a unit of South Africa's Transnet, is among the companies on the list for placing formal bids.

Transnet Freight Rail is the largest division of Transnet and has an extensive rail network across South Africa that connects with other rail networks in sub-Saharan Africa.

The NRZ's operations have been severely affected by legacy debts of about $70-million, aged railway equipment, outdated locomotives, defunct track signals and a dire need for infrastructure rehabilitation.

At its 1990s peak, the NRZ had a workforce of 12000 workers, but presently has about 5000 staff - with employee relations severely strained by the non-payment of salaries.

Industrial action - the longest lasted three months last year - has hurt frail revenues.

Cargo volumes transported by the parastatal have been in steady decline; hovering at about a million tons from 3.5million tons in 2014.

Independent estimates place the recapitalisation requirements of the NRZ at $1-billion (R12.8-billion). The government, however, conservatively puts the recapitalisation needs at about $600-million.

A compulsory pre-bid tender conference will be held at the NRZ's headquarters in Bulawayo this week and the tender process will close on July 4.

The terms of reference for the tender, among others, will be for the supply of locomotives, wagons as well as railway infrastructure.

NRZ board chairman Larry Mavima confirmed on Monday that interest in the parastatal's recapitalisation had been huge: 21 companies so far had picked up the tender documents.

"We wanted to open up the process to everyone so that we can get the best deal possible.

"It [the tender process] now has a beginning and a closing date and gives others an opportunity to participate.

"It's more inclusive rather than being exclusive," Mavima said.

Transnet spokesperson Molatwane Likhethe said the company was, as part of its geographic expansion strategy, "considering its options" in the NRZ transaction and would " assess the opportunity" in line with its governance processes.

"Africa as a continent is an important aspect of Transnet's expansion plans as the company diversifies from its South African base to expand operations outside our borders," Likhethe said.

The government of President Robert Mugabe has resisted calls for the privatisation of the loss-making parastatal.

About two years ago, a deal with the Development Bank of Southern Africa appeared to be imminent under the helm of former chairman Alvord Mabhena, who had been at the forefront of negotiating the deal.

In February last year Mabhena was removed from his post by Minister of Transport Joram Gumbo amid widespread speculation that members of the Zanu-PF elite were unhappy with Mabhena's insistence on clinching a deal with the bank - particularly as the deal was slanted towards the supply of railway infrastructure, as opposed to the parastatal receiving hard cash to fund its recapitalisation efforts.

Mavima, however, said there never had been anything substantial on with the bank, although the parastatal had extended an invitation anew to the bank to enter the present calls for the tender process.

"Actually it [a deal] was very far from conclusion; there was only a memorandum of understanding signed with the DBSA and their mandate expired before I was appointed and they never bothered to renew it.

"They made an offer cabinet considered very expensive and they were asked to review it and they never came back," he said.

A number of parastatals in Zimbabwe, such as the struggling airliner Air Zimbabwe, are in search of foreign investors to help turn around their fortunes, as years of mismanagement, obsolete equipment and high debts are curtailing their operations.