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Report: President Mnangagwa overrules transport Minister on NRZ deal

Report: President Mnangagwa overrules transport Minister on NRZ deal. This comes as it emerged that Mnangagwa and cabinet on Tuesday slammed the door on Matiza’s face as he attempted to intensify his frantic manoeuvres to derail the Diaspora Infrastructure Development Group (DIDG) deal and smuggle in through the back door an obscure Dubai-based firm, Feonirich Investments LLC, which was not even involved in the tender process.

President Emmerson Mnangagwa this week moved to rein in Transport minister Joel Biggie Matiza over his bid to scuttle the US$400 million National Railways of Zimbabwe (NRZ) recapitalisation project by “becoming a real pest in official circles” over the funding issue, the Zimbabwe Independent can report.

“President Mnangagwa summoned Matiza over the issue on Monday and told him to explain himself and write a report proving his claims that there is no money to finance the project. And then cabinet intervened to stop the minister on his tracks over the issue,” a senior government official said.

“As far as authorities are concerned, Matiza has now become a real pest or an annoyance; a nuisance if you like, on this project. Instead of working with others properly, he seems determined to derail the project and bring in his preferred consortium which did not even participate in the tender or bidding process.”

Informed sources said Mnangagwa intervened after it became clear Matiza was unrelenting in his push to muscle out DIDG from the multi-million dollar deal. Following the Independent’s series of exclusive reports about Matiza’s activities, including his last-ditch effort to block the project last week on Friday in a meeting with the NRZ board, Mnangagwa summoned Matiza for a meeting to decisively deal with the issue. The NRZ board meeting in Harare on Friday last week was also attended by NRZ

chairperson Martin Dinha and his deputy Major-General William Dube (not Major-General Hlanganani Dube), and NRZ and Transport ministry officials. Mnangagwa met Matiza with senior officials in the Office of the President and Cabinet on Monday to listen to the minister and ask questions, before telling him what the way forward was.

During that meeting, which was held at President’s Munhumutapa offices, Mnangagwa listened to Matiza’s issues before asking him to write a report on that. Matiza insisted to Mnangagwa that DIDG has no money to fund the project to revamp the moribund rail operator and the associated infrastructure.

Joel Biggie Matiza

Sources have always pointed out that Matiza’s campaign is designed to bring onboard Feonirich which even failed to submit its papers before the bidding process was closed in 2017 by the State Procurement Board, now the Procurement Regulatory Authority of Zimbabwe.

Feonirich made desperate efforts to submit its papers after missing the deadline and continued to push to be involved in the deal. Matiza is said to be working with some few ministers and businesspeople, as well as transaction and legal advisers who have vested interests in the deal.

Matiza claims DIDG has no money even if the company has presented the NRZ board and authorities with evidence of funding by African Import-Export Bank (Afreximbank) as the mandated lead arranger of the transaction. Afrexim will also inject US$100 million into the project.

A number of big South African banks have also indicated they have money to fund the project, by providing term sheets of close to US$1 billion. However, the funders have not released the money pending the signing of relevant agreements, particularly the Joint Venture (JV) Agreement needed to establish a new concession company to implement the project.

A team from Finance ministry and the Reserve Bank of Zimbabwe is currently working on that process. Sources said after meeting Matiza on Monday, Mnangagwa then met Dinha on Tuesday to get his side of the story in relation to the row over funding. While Matiza says DIDG has no money and insists that the funding must first to deposited to government or NRZ accounts, Dinha has provided his board and authorities with funding details showing that the money is there. Afrexim itself has confirmed to authorities that they will fund the project.

Mnangagwa and NRZ officials, sources said, have told Matiza that it was not serious for him to expect a technically insolvent entity like NRZ, saddled with a US$500 million debt overhang, to directly receive any capital injection through its structures or accounts.

The sources said Matiza has been told that the money will only come through after the JV Agreement has been signed. The money will go to the new concession company tasked with implementing the project.

“During the Monday meeting, the President emphasised that NRZ, crippled by a US$500 million historical debt, would not get any money transferred directly to them. No-one in his/her right mind will put his money there. So to have the minister telling the President that DIDG has not proven it has money because he wants a proof of payment or deposit and US$400 million reflecting in the NRZ account is utterly ridiculous,” one source said. “It clearly demonstrates the minister’s lack of understanding of how projects of this nature are financed.

If you have term sheets, you now have proof of funding capacity. Banks are not stupid to issue term sheets for something not worth funding. In this case, DIDG has attracted the interest of banks with well over US$1 billion when only US$400 million is required to implement the project.”

Matiza was yesterday not answering his phone and neither had he responded to WhatsApp messages, although he read them. Dinha’s secretary said the NRZ chairperson was not available as he nursing a heart ailment.

After the Monday meeting with Mnangagwa, sources said, Matiza was persistent as he attempted to use the cabinet meeting on Tuesday to further the “narrative that DIDG had failed to provide proof of funding crucial towards rolling out the multi million project.”

However, sources said during the cabinet meeting Matiza was reminded by International Trade and Foreign Affairs minister Sibusiso Moyo and Chief Secretary to the President and Cabinet, Misheck Sibanda, that Mnangagwa had the day before resolved the funding row.

“Matiza has been contradicting the President, his appointing authority, and has been seeking to mislead cabinet. For the deal to progress, Treasury and government need to move swiftly and allow NRZ to sign the JV Agreement so that implementation can begin. DIDG has demonstrated the funding capacity that it is ready to move,” a source said.

“So what else does Matiza want? Feonirich? Only in Zimbabwe can a minister try to get away with such murder.”

Sources said implementation of the deal, being scrutinised by Treasury for due diligence and approval, would start once the JV Agreement between DIDG and NRZ is signed. Once formed and incorporated, the new concession company will receive money Afrexim and other regional banks waiting in the wings with well over US$1 billion to bankroll the project.

According to funding term sheets and proposals seen by the Independent and presented to the NRZ board on August 30, over US$1 billion is available for the project with Afrexim having tabled a solid funding proposal, the sources said. Mnangagwa underscored the urgency of implementation of the project during his state-of-the-nation address and official opening of the second session of the 9th parliament last week.

Source – The Independent

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