Zimbabwe to embark on a US $400m rail project

19 October 2017

The Zimbabwean cabinet has given a nod to an investment deal between the National Railways of Zimbabwe (NRZ), the Diaspora Infrastructure Development Group (DIDG) and South Africa’s Transnet. The deal is to construct a rail line at a cost of US $400m.

According to Dr. Joram Gumbo, the Transport and Infrastructure Development Minister the new development ultimately leads to the last leg of negotiations before the deal takes off. DIDG/Transnet was recently announced as the preferred investor out of 85 companies that are interested in investing in the country’s sole rail company. Recently the South African banks, Standard Bank, Nedbank, Rand Merchant Bank (RMB), and the Industrial Development Corporation (SA) have put up funding letters worth US $1.2bn for the project, of which US $400m is earmarked for initial investment in capital expenditure.

Questions were raised on the competence of Transnet to ably invest in the project but, it later emerged that many of the clarifications sought had been submitted and evaluated during a process that involved the State Procurement Board (SPB); the Office of the President and Cabinet (OPC), and many other Government agencies and departments. DIDG/Transnet emerged as a winning bidder from five other companies, China Civil Engineering Construction Corporation; Crowe Howath Welsa; Croyeaux (Pvt) Limited; Sinohydro Corporation Limited; Smh Rail Sdn Malaysia that had been shortlisted for the deal. In the initial stages, 82 companies submitted bids for the parastatal.

Essentially, the DIDG/Transnet has an ambitious three-year strategy that is premised on buying new locomotives and wagons and revamping operational efficiencies. From the US $400m capital expenditure, US $150m will be earmarked for 24 mainline locomotives and 13 rail shunters or shunting locomotives. Twenty locomotives that are part of the current fleet are expected to be refurbished. Similarly, NRZ plans to acquire 1000 new wagons and refurbish 700 that it presently has. It is also envisaged that more than US $100m will be invested in modernizing and refurbishing the State enterprise’s train control and signalling system. 

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